‘Nil’ filing of tax returns: FTO asks FBR to conduct detailed audit of a medical college

ISLAMABAD: Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to conduct a detailed audit of a medical college which has been filing “Nil” Income Tax Returns since 2017.

Based on the multiple reported news, the FTO Secretariat initiated Own Motion Investigation into tax affairs of Watim Medical College, vide OM No.0044/OM/2023.

Currently, in addition to Public Sector Medical & Dental Colleges there are around 75 PMDC approved Medical and 43 Dental Colleges in Pakistan. Though PMDC maintains a structured regulatory mechanism yet tax matters of these private colleges have not been appropriately attended by FBR. During the past few years there has been regular reporting as well in various medical related websites about the irregularities and violation of tax laws committed by Private Medical Colleges in Pakistan.

There is maladministration with reference to irregularities committed by Trusts controlling the medical colleges, especially improper compliance of withholding taxes, non-conformity with stipulations attached to NPO status, irregularities committed while issuing approvals under section 2(36) of the Income Tax Ordinance 2001and lack of well-structured audit of withholding taxes.

The FTO office regretted that admittedly Nil Income Tax Returns have been filed for the last five years but department didn’t bother to cross check this state of affairs. Private Medical College is a highly lucrative business involving high volume of annual receipts but the Corporate Tax Office (CTO’s) inaction and ineptitude is glaringly visible.

As per comments, the Watim Medical College is registered in 2017 and regularly filing withholding tax statements under section 165 of the Ordinance, 2001. But in the breath CTO confirmed that Nil Withholding Statements have been filed.

Once again non-withholding of taxes at source is blatant way to evade chargeable taxes but CTO is unmoved here as well. As per record no withholding audit has been conducted by the department.

Despite the fact that College website exhibits break-up of local receipts, fees received from overseas and foreign students but during last five years no effort has been made to cross check with college foreign currency and PKR accounts.

The CTO has yet to look into a potential revenue yielding case which is in operations since 2017.

FTO order added that no information has been obtained about donations received if any by the college.

As per college website, the college maintains a highly qualified faculty but CTO is completely blank about this aspect or tax withholding u/s 149.

The said acts of omissions & commission constitute maladministration in terms of section 2(3)(ii) of FTO Ordinance, 2000.

In view of above, FBR to direct the concerned Commissioner-lR to conduct detailed audit of the subject college which thus far has been filing Nil Income Tax Returns since 2017.

The concerned Commissioner-IR to enforce proper withholding statements and conduct detailed withholding audit of the previous years with special reference to Para 10 above and report compliance within 60 days.

Copyright Business Recorder, 2023