Travel and insurance agents will have to pay withholding tax at the rate of 10 percent of their commission incomes, effective from July 1.
According to a circular, issued by the Central Board of Revenue (CBR), this would also constitute final discharge of tax liability for these categories for the 2005 tax year and onward.
"Corresponding amendments in Section 115, Section 189 and Section 233 of the Income Tax Ordinance 2001 have accordingly been made," said the circular.
It further said that as per existing provisions, income from commission and brokerage was liable to withholding tax at the rate of five percent of the commission/brokerage income. The said tax was adjustable against final tax liability.
Section 233 has been amended through Finance Act 2004, whereby the commission income of indenting commission agents, advertising agents and yarn dealers would continue to be subjected to deduction of withholding tax at the rate of five percent of the gross commission/brokerage.
Such deduction would be a final tax in respect of commission income of these categories for the 2005 tax year and onward.
The CBR further clarified that the withholding tax under Sub-Section (2) of Section 154 of the Income Tax Ordinance 2001, relating to export indenting commission agents would also be the final tax.