ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has forwarded its proposals to Federal Board of Revenue for the upcoming Budget 2013-14.
SECP has proposed to impose tax on income of foreign educational institutions and similar non-resident entities providing different types of certificates, degrees or courses in Pakistan.
The incomes of such non-resident entities and foreign educational institutions are not currently taxed in Pakistan. These institutions/entities are earning heavy fees/income from Pakistan. For this purpose, a new section 152 A is proposed to be introduced and the banking company needs to be appointed as the with-holding agent.
Furthermore, SECP has proposed to bring the insurance agents under the normal tax regime by abolishing final tax regime in the next budget. Presently, insurance agents are taxed at 10 per cent of the commission income received by them. The tax is deducted at source from their payments of commission and this deduction is treated as full and final tax on them.
It is proposed that insurance agents should be treated under Normal Tax Regime rather than full and final tax regime. Where they must be taxed as per normal tax rates applied to the Individual and tax deducted could be claimed by them as advance tax from the total tax liability.
The salaried employees of the insurance companies are getting salary plus commission from their employers whereas the commissions are withdrawn in the name ‘other than’ by them e.g. one’s spouse, children, other family members, relatives, friends and even servants, the SECP proposals said.
The SECP said that the purpose of this self hiding is to avoid the clubbing of the commission income into one’s salary income to reduce the tax liability by paying it at lower slab of 10 per cent straight as full and final tax rather including these amounts into their salaries where higher tax rates would be applicable as required under section 12(2)(a) of the IT Ordinance-2001. Hence this misstatement with mala fide intention resulted in revenue loss to the Government.
Moreover, the huge amount of commission drawn by the person who are not in the direct tax net but through principal do not also submit their wealth statements.
