Digital Payments Now Mandatory: Punjab Businesses May Face Heavy Penalties
The Punjab government has proposed strict penalties in its latest finance bill to promote digital payments and improve tax compliance across the province. Under the new bill, businesses that refuse to accept digital payments will now face heavy penalties.
Any business that denies customers the option to pay through debit or credit cards, QR codes, or mobile wallets could be fined up to Rs 1 million. This is part of a broader push by the government to move toward a more transparent and digitised economy.
Digital Payments Now Mandatory: Punjab Businesses May Face Heavy Penalties
For a first-time violation, the minimum fine is Rs 400,000. If the same business caught again, the fine will not be less than Rs 300,000 for each repeat offence. After three such violations, the government may even seal the business premises for up to one month.
The finance bill also aims to strengthen the Electronic Invoice Monitoring System (EIMS). This system helps the government track transactions more efficiently and ensure that businesses report their income accurately. Penalties for not complying with EIMS have been increased, showing the government’s firm stance on digital documentation.
Another key change in the bill involves the Punjab Sales Tax on Services (PSTS). The current “positive list” system—where only listed services are taxed—will now be replaced with a “negative list” model. This means all services will be taxed unless they are specifically exempt.
26 categories of services will remain exempt from PSTS. These include:
- Public healthcare services by government institutions
- General education services
- Public transport
- Religious, cultural, and recreational services provided by the government
- Services linked to government housing schemes
- Services from registered charitable institutions
- Construction services
- Non-air-conditioned personal care services
- Hajj and Umrah travel agents
- Diplomatic missions
- Residential property rentals
- Certain port and terminal operator services
These exemptions ensure that taxes do not burden essential public services and charitable activities.
See Also: Women to Get 25% of Govt’s Electric Bike Subsidies in Gender-Inclusive Initiative
Although the revenue target for the fiscal year 2024-25 has been lowered from Rs 471 billion to Rs 421 billion, the Punjab government is aiming high for FY 2025-26. It has set a new target of Rs 524.7 billion in provincial tax revenue.
In addition to the penalties and exemptions, the bill also introduces some technical tax reforms. These include:
- Limiting input tax adjustment to the standard tax rate
- Requiring proper apportionment of input tax for mixed (taxable and exempt) services
- Defining tax responsibilities between withholding agents and service providers in business-to-business transactions
Overall, the finance bill reflects Punjab’s serious efforts to push for digital transformation, widen the tax base, and strengthen tax enforcement mechanisms. Businesses will now have to modernise their payment systems and improve compliance to avoid steep fines and operational disruptions.
