ISLAMABAD           -           A special audit of Auditor General of Pakistan (AGP) on Thursday gave observation of Rs1563.01 million on taxation of educational and medical institutions working as non profit organisations (NPOs)/trusts.

A special audit on “The Scope of Taxation of Educational and Medical Institutions working as NPOS/Trusts” was conducted during the period from April to June 2018.

The objective of the audit scrutiny was to check whether due amount of tax has been paid by the educational and medical institutions working as NPOs/trusts.

The auditors selected four fields i.e. Large Tax Payer Unit (LTU) and Regional Tax Office (RTO) Islamabad, RTO Rawalpindi and Corporate Regional Tax Office (RTO) Lahore, having jurisdiction over NPOs/trusts.

Audit was confined to examination of data i.e. tax profiles, returns, and audited accounts.   

 Report available with The Nation, viewed that there are variations in procedures for availing approval, conditions of compliance for essential documents and nature of benefits and concessions.

The audit found that non-withholding of income tax by educational institution was amounting to Rs459.63 million and loss of revenue due to non-invoking the provisions of relevant section 161 and 205 of the income tax ordinance 2001 to Rs105.71 million.

It also found that loss of revenue due to incorrect claim of exemption and tax credit was Rs55.69 million and short collection of withholding of income tax on rent of property was Rs19.15 million.

The report mentioned that Rs15.35 million loss of revenue due to incorrect tax credit claimed under section 100C and non deduction of withholding income tax salary was Rs4.13 million.

It also said in findings was loss of revenue due to non-invoking the provision of section 182 was Rs0.92 million and loss due to non-recovery of default surcharge under section 205 of the income tax ordinance, 2001 was Rs1.34million.

The report also observed Rs900.78 million loss due to incorrect claim of tax exemption.

The special report recommended assessment of declaration made by taxpayer needs to be counter checked at appropriate level to ensure correct taxation of NPOs/Trusts.

The audit also recommended a periodical scrutiny of new business ideas arising in the market which earn huge money and are not paying its due tax share because of lack of provisions in law to tax the revenue.

The audit recommended internal controls should be applied for correct assessment and preventing short realisation of tax due and validation checks in e-filing system of income tax return to ensure attachments/completion in the NPOs cases.

The report also said that 20 educational institutions assessed by the four field offices of FBR were found not to have deducted and withheld tax in the fee collected by them from July 2014 to June 2017 as per income tax assessment record which resulted into loss of revenue amounting 457.28 million.

The Departmental Accounts Committee (DAC) was directed by RTOs/LTU, Islamabad and CRTO, Lahore to get the requisite record verified by the auditors and report final compliance by 15th January 2019.

The audit recommended expeditious recovery of amount pointed out and finalisation of proceedings within stipulated time period.

The audit also recommended initiating appropriate action against the persons(s) responsible for the lapse.