ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has suggested legal changes to the Stamp Duty Act 1899 in order to introduce e-stamping to pay provincial duties on various documents.

The suggestion floated by the Technical Committee on Insurance — body headed by SECP — includes chairman of the Insurance Association of Pakistan, representatives from insurance companies and central bank.

The committee proposed amendments to the stamp duty laws administered by provincial revenue boards.

Under existing laws, insurance companies are required to physically affix stamps on all insurance policy documents.

Since a large number of policies are sold electronically, pasting a physical stamp has created administrative hurdles.

The idea which has been forwarded to the State Bank of Pakistan (SBP), promotes financial inclusion through promotion of technology-based distribution channels, removing bottlenecks and hurdles from processes and streamlining the systems.

The SECP has proposed to introduce electronic stamping (e-stamping) regime for all provinces for insurance policies. The step seeks to promote distribution of insurance through technology-based channels such as mobile phone, internet, mobile applications etc.

The SBP, SECP and insurance sector representatives acknowledged the need for digital platforms to disseminate insurance policy documents. They also agreed that such methods will not only help in cost saving for the insurers but will also bring efficiencies and time saving in the processes.

“There is a need to amend 1899 law to address such issues as other financial products like shares and properties are already shifting towards electronic mode from the paper-based documentation,” said an official of the SECP.

The SECP has suggested that an option like a pre-paid card can be introduced to facilitate payment of provincial tax, but such an option has to be incorporated in the law first.

Currently, only Punjab has made amendments in the Stamp Duty Act 1899 to accommodate certain modern requirements but it still lacks electronic based tax payment mechanisms.

Published in Dawn, October 26th, 2018

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