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August 21, 2019

FBR issues notices to noncompliant private educational institutions


August 21, 2019

KARACHI: The Federal Board of Revenue (FBR) has issued notices to more than 6,000 private education institutions in the city for not paying their due taxes and not registered with the authority, The News learnt on Tuesday.

The broadening of tax base (BTB) zone of Regional Tax Office- (RTO-II), Karachi found a large number of private educational institutions unregistered with the tax authority despite having thriving businesses.

The broadening of tax base conducted physical surveys to gather information from matriculation and intermediate boards, directorate of education and after meeting with private school institutions.

“It has been transpired that quite a large number of private schools, A-Level, O-Level tution centres, pre-nursery training schools and academics are having booming business in Karachi,” an official document said.

“When there particulars were cross-checked with the data available with the FBR, most of these tution centres and private schools were not registered with the FBR and were not paying their due taxes.”

The department obtained details of schools with number of students in each class and fee charged and tax deducted under section 236 (i) of Income Tax Ordinance, 2001. It also garnered details of salaries paid under section 149 of the Income Tax Ordinance, 2001.

The tax department issued notices to 6,324 primary, elementary, secondary, higher secondary, O and A Level schools.

The surveys identified 1,370 noncompliant private education institutes in district east, 1,307 in

district central, 1,005 in district west, 921 in district Korangi, 911 in district Malir, and 810 in district south.

The tax department said the tution centres, academics and schools are not filing their income tax return and statement and are not deducting tax on salaries being given to the teachers and staff and also not deducting tax on supplies, “thus incurring huge loss to the national exchequer”.

Educational institutions are required to deduct five percent as withholding tax on the amount of fee exceeding Rs200,000/year from individuals depositing / paying fees.

“Notices under section of the Income Tax Ordinance, 2001 being issued to all those schools and tution centres and further progress in this regard would be submitted on 26-08-2019,” the official document added.

The latest action was a part of the government’s efforts to broaden tax base. Previously, the tax authorities issued notices to doctors, auto dealers, restaurants, and bakeries to bring businesses in the country’s biggest city into the tax net.

There are only 2.493 million filers of tax returns in the country with over 200 million population. With this narrowed base, the FBR is required to collect Rs5.550 trillion for the current fiscal year. The first test of the Federal Board of Revenue is to achievecollection of Rs1.072 trillion for the first quarter (July-Sept) period under an International Monetary Fund’s (IMF)

condition. Pakistan agreed to $6 billion IMF loan program last month.

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