livelawpk.com - Financial Irregularities in Fee Charging by Medical Colleges

Financial Irregularities in Fee Charging by Private Medical Colleges resulting in Loss of Tax Revenue --- Directions were issued by Federal Tax Ombudsman to FBR to resolve the issue in its true letter and spirit

11 months, 1 week
401

Islamabad 15-01-2024: There are numerous private medical and dental colleges in Pakistan. Despite PMDC oversight, tax matters of private colleges have not been adequately addressed by FBR. A report in the 'Business Recorder' dated 25.07.2023 detailed misappropriations and irregularities by trusts controlling medical colleges.

The Trusts controlling medical colleges misuse approval under section 2(36) of the Income Tax Ordinance for commercial profit. Private medical colleges are not properly discharging their tax withholding obligations. There is a lack of a well-structured audit of withholding taxes. The Fees charged from overseas students are not reflected in accounts for taxation. The Medical Colleges and Trusts do not conform to PMDC rules regarding charitable functions. There is suppression of receipts and non-disclosure of heavy donations in accounts.

An investigation was initiated by Federal Tax Ombudsman (FTO) due to serious threats to proper taxation and charitable functions. Lack of stringent periodic audit of tax withholding approval regime is identified as a cause for malpractices and violations. The glaring discrepancies found in withholding tax statements, including missing periods and inconsistent patterns. Claims of tax credit need further investigation.

The Federal Tax Ombudsman directed FBR to complete case review by the Commissioner-IR, Zone-I, LTC) Lahore to address identified loopholes and risk areas. It is required to analyze the lists of employees of Ibadat Educational Trust to verify tax compliance. Obtain information on foreign students' fees and ensure proper declaration in audited accounts.