For bringing them into the tax net, the Federal Board of Revenue (FBR) has compiled a list of over 1,000 leading private hospitals and clinics, understood to be fleecing the public in the name of provision of better services.
The FBR launched the registration drive against famous hospitals/clinics in the private sector on the basis of an enforcement plan drafted by Advisor to FBR Chairman, Abdul Wadood Khan.
The level of non-compliance by the well reputed private hospitals could be judged from the fact that over 944 top hospitals have not obtained National Tax Numbers (NTNs) and have been operating out of the tax net. The Pakistan Revenue Automation Limited (PRAL) contains data of 1166 hospitals/clinics operating across the country. Private hospitals/clinics contributed Rs 58,67,90,134 in 2008-09, against Rs 24,93,36,161 during 2007-08, reflecting a difference of Rs 33,74,53,973.
The FBR has provided the lists of potential hospitals to the field formations for their immediate registration with the income tax department. The report has strongly recommended audit of top hospitals in all major cities to determine their actual turnover and check the level of under-reporting/concealment.
The non-compliance report of private sector hospitals showed that huge amount of income tax has not been paid by top hospitals, earning millions of rupees on daily basis. The analysis showed that out of 1166 famous hospitals in private sector across the country, only 222 hospitals/clinics have obtained NTNs. The FBR 'NTN Master Index' showed that luxurious hospitals are providing services to rich people, but most of them are not ready to come into the tax net.
Data furthershowed that a large number of hospitals and clinics are not paying any income tax. Around 944 private hospitals are not contributing their due share to the national exchequer. The database further showed that 222 cases contributed negligible amount during 2008-09. This is evident from the fact that revenue collection from private hospitals/clinics stood at Rs 56,67,90,134 during 2008-09 as compared to Rs 24,93,36,161 during 2007-08.
The report highlighted that if small a number of 222 hospitals/clinics could contribute this amount, the projected amount from the remaining hospitals may obviously yield manifold.
Keeping in view the efforts to improve overall revenue collection, the FBR has issued instructions to the Members Domestic Operations North and South to thoroughly check hospitals/clinics for bringing them into direct taxes net.
Secondly, the field formations should immediately take enforcement and audit measures.
The FBR database showed that Regional Tax Office (RTO) Karachi received only 50 income tax returns from the private hospitals/clinics during 2008 as compared to 290 non-filers of returns. A total of around 340 private hospitals/clinics fall in the jurisdiction of the Karachi RTO. The overall contribution of taxes by these hospitals stood at Rs 2,67,53,226 during 2008-09. Total number of hospitals/clinics located in Karachi could be more, but the FBR is initially focusing on top private hospitals/clinics.
Within the jurisdiction of Lahore RTO, data of 327 leading private hospitals/clinics has been available with the department. A total of 281 units have not filed their returns, and only 46 have filed the returns. Approximately Rs 3,00,96,121 has been deposited during 2008-09 in the national kitty by these units located at Lahore.
In the jurisdiction of Rawalpindi RTO, 91 top private hospitals/clinics are providing services to the elite class. Out of these, 70 are non-filers of income tax returns, and only 21 have filed returns, which deposited Rs 50,34,86,247. This amount is higher as compared to private hospitals/clinics falling in the jurisdiction of Karachi and Lahore. At the same time, the number of income tax returns filers is less as compared to those filed returns in Karachi and Lahore. The return filers in Karachi, Lahore and Rawalpindi are 50, 46 and 21 respectively.
The data of Islamabad RTO showed that out of 84 hospitals/clinics in posh areas of the federal capital, only six filed returns, and 78 were non-filers. The Islamabad RTO received Rs 2,08,08,662 during 2008-09.
Out of 30 private hospitals/clinics falling in the jurisdiction of Abbottabad RTO, only five filed income tax returns, whereas 25 were non-filers. In case of Faisalabad RTO, 25 private hospitals/clinics filed income tax returns as compared to 50 non-filers. The data of 75 leading private hospitals is available with the department.
Hyderabad RTO contains database of 20 private hospitals/clinics. Out of these, 15 have filed returns, whereas five are non-filers. In the jurisdiction of Gujranwala RTO, data of 56 leading private hospitals/clinics is available with the department. Out of these, 45 are non-filers of returns as compared to 11 filers.
In case of Multan RTO, data of 82 hospitals is available with the tax department. Out of total units, 50 have failed to file the income tax returns, whereas only 32 filed the due returns.
The data of Peshawar RTO showed that total 21 private hospitals/clinics are operating in the jurisdiction of the department. A total of 17 have not filed returns as compared to four filers. Similar trend has been observed at the Quetta RTO where four units are non-filers of returns as compared to seven filers of returns. Only 11 units are registered with the said RTO.
The data of Sialkot RTO showed that a total of 31 hospitals/clinics are working in the jurisdiction of the said regional office. A total of 13 units are non-filers as compared to 18 hospitals etc which filed returns.
As far as Sukkur RTO is concerned, out of total eight private hospitals/clinics, no one is filing income tax returns. It is worth mentioning that the Advisor to the FBR Chairman, Abdul Wadood Khan, has issued several analytical reports, studies and enforcement plans, which helped the department in broadening the tax base and improving compliance by the field formations.
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