Tax rates on brokerage and commission in tax year 2022

Tax rates on brokerage and commission in tax year 2022

The Federal Board of Revenue (FBR) has released the income tax rates applicable to brokerage and commission for the tax year 2022, as outlined in the Second Schedule of the Income Tax Ordinance, 2001.

The ordinance, updated up to June 30, 2021, incorporates amendments introduced through the Finance Act, 2021, providing clarity on the tax rates for specific professions.

The rates for the deduction or collection of income tax under Section 233 of the Income Tax Ordinance, 2001, are detailed as follows:

1. Advertising Agents: 10%

2. Life Insurance Agents (commission received less than Rs.0.5 million per annum): 8%

3. Persons not covered in categories 1 and 2 above: 12%

These rates aim to regulate the income tax deductions on brokerage and commission, ensuring a fair and standardized approach across different professions.

Additionally, Section 223 of the Income Tax Ordinance, 2001, sheds light on the appearance of authorized representatives in connection with proceedings under the ordinance. This section defines who qualifies as an authorized representative for a taxpayer and establishes guidelines to maintain the professionalism and integrity of those representing taxpayers.

According to Section 223:

1. Any taxpayer entitled or required to attend before the Commissioner, the Commissioner (Appeals), or the Appellate Tribunal in connection with any proceeding under the ordinance may, except when required under Section 176 to attend personally, attend by an authorized representative.

2. An authorized representative may include a relative of the taxpayer, a current full-time employee, an officer of a scheduled bank, a legal practitioner entitled to practice in Pakistan, an accountant, or an income tax practitioner.

3. Certain restrictions exist, such as individuals dismissed or removed from service in the Income Tax Department, those who have resigned or retired under specific conditions, and those convicted of offenses related to income tax proceedings.

4. Misconduct by legal practitioners or accountants may lead to disciplinary action, affecting their right to represent a taxpayer.

The Commissioner has the authority to issue orders prohibiting representation based on misconduct, and individuals subject to such orders have the right to appeal to the Board.

It is essential for taxpayers to be aware of these provisions to ensure proper representation during any proceedings related to income tax. As part of the disclaimer issued by Team, it is important to note that while efforts are made to provide the correct version of the text, the team is not responsible for any error or omission. Taxpayers are encouraged to consult with tax professionals for a comprehensive understanding and application of the regulations in their specific circumstances.

In conclusion, the release of income tax rates for brokerage and commission, coupled with the provisions outlined in Section 223, contributes to a more transparent and accountable taxation framework. These measures not only regulate the tax rates applicable to specific professions but also establish guidelines for authorized representation, ensuring fairness and integrity in income tax proceedings.