The Federal Tax Ombudsman (FTO) has directed a comprehensive investigation by the Federal Board of Revenue (FBR) into a medical institution consistently reporting “Nil” Income Tax Returns since 2017.
Initiating an independent inquiry, the FTO Secretariat delved into the tax affairs of M/s. WATIM Medical & Dental College, referencing the case as OM No.0044/OM/2023.
Despite the existence of numerous Public Sector Medical & Dental Colleges, and approximately 75 PMDC-approved Medical and 43 Dental Colleges in Pakistan, the FBR has seemingly overlooked addressing the structured regulatory mechanism for tax compliance among private colleges.
Continual reports from medical-related sources have highlighted various irregularities and violations of tax laws by private medical institutions across Pakistan in recent years.
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The FTO expressed alarm over mismanagement within Trusts overseeing these colleges, pointing out issues related to withholding taxes, non-adherence to NPO status conditions, discrepancies in approvals under section 2(36) of the Income Tax Ordinance 2001, and the absence of comprehensive audits for withholding taxes.
Criticizing the department’s apparent negligence, the FTO underscored the failure to verify the consistent filing of Nil Income Tax Returns over the past five years. Despite these institutions being lucrative businesses with significant annual earnings, the Corporate Tax Office’s (CTO) lack of effective action has become apparent.
While WATIM Medical College regularly submitted withholding tax statements under section 165 of the Ordinance, 2001 since its 2017 registration, the confirmation of Nil Withholding Statements by the CTO raised concerns.
Highlighted was the absence of withholding audits and the failure to cross-verify financial details provided by the college against their actual accounts over the past five years.
The FTO’s directive stressed the necessity for the concerned Commissioner-IR to conduct a thorough audit of the college filing Nil Income Tax Returns since 2017. This entails ensuring proper withholding statements and conducting detailed audits within 60 days, focusing specifically on identified irregularities.
