FTO for strict financial scrutiny of private medical and dental colleges 

ISLAMABAD: The Federal Tax Ombudsman (FTO) has issued directives to the Federal Board of Revenue (FBR), to make private medical and dental colleges submit audited accounts for scrutiny of their financial transactions spanning previous tax years.

The directive stems from an Own Motion investigation initiated by the FTO Secretariat, Islamabad, prompted by widespread concerns highlighted in both print and social media regarding the tax affairs of private medical and dental colleges across Pakistan.

Instructing the FBR to address the glaring lapses indicative of departmental negligence, the FTO has urged the relevant Commissioner-IR to take immediate action to rectify deficiencies in managing this sector.

Of particular concern is the withholding tax mechanism, with a focus on Multan Medical & Dental College. The FBR is urged to ensure that all faculty members listed on the college's website are consistently subjected to appropriate withholding taxes.

Additionally, employees receiving taxable salaries should be duly registered on the Tax Roll, and cases of default must be promptly reported to the respective Regional Tax Office (RTO) to widen the tax base.

The FTO stresses the need for specialists receiving shares from private practice at teaching hospitals to declare such income and undergo requisite withholding tax procedures.

It seeks a comprehensive, year-wise list of the colleges' local as well as foreign students from the Pakistan Medical and Dental Council (PMDC), verifying the status of tax deductions on their fees.

An examination of pertinent documents for Tax Years 2021 and 2022 reveals significant failures on the part of the FBR to monitor withholding taxes. It shows that no withholding tax statements were filed for Tax Year 2021, and the department has yet to enforce compliance. Consequently, a show cause notice for penalty imposition has been issued during the ongoing investigation proceedings.