Adoption of a simple procedure for the issuance of exemption certificate under Section 153 of the Income Tax Ordinance 2001 has been suggested by the Travel Agents Association of Pakistan (Taap).
Following a meeting the Taap members had with the Regional Commissioner Income Tax (RCIT) here on July 5, where the issue was discussed, the Taap informed the RCIT that his proposal for submitting the copies of paid challans of tax deducted and paid into the treasury by airlines was not feasible.
In a letter, the Taap reiterated that for the last six years, the International Air Transport Association (IATA)-accredited travel agents were issued exemption certificate on yearly basis to avoid double taxation and cumbersome procedure of refunds. The certificate was issued on the basis of statement made out on the company's letterhead and stamped, showing airline-wise commission earned and withholding tax paid to the collecting agent, ie the airline.
It said there were 40 odd airlines, operating in Karachi, and the collection of paid challans, as proposed by the RCIT, would be very time consuming and involved unnecessary paper work for the Income Tax Department as well as Taap members.
The submission of sales reports to the Income Tax Department, showing amount of tax paid to the collector, would have the same effect, said the Taap.
There are approximately 228 IATA travel agents and over 40 airlines. Submission of fortnightly reports by each agent to the Income Tax Department will scare away the personnel, who are responsible to certify and verify the figures. This practice will be boring and time consuming too.
Since the collecting agents (airlines) are submitting to the Income Tax Department quarterly reports of tax collection, made from each IATA agent, this statement can easily be tallied with the statement submitted by the travel agent at the time of requisitioning the exemption certificate. If at any time a discrepancy is detected, the agent or the concerned airline could be called to explain the irregularities committed and necessary action taken.
Taap requested the RCIT to reconsider its proposal in the best interest of exchequer and taxpayers.