ISLAMABAD: Regional tax offices have widened the scope of issuing tax notices to the owners of private schools and tuition centres over their failure to come into the tax roll and pay their due taxes despite having booming business in big cities.

The notices have been issued to unregistered private schools and tuition centres by the dedicated zones of the Broadening of Tax Base (BTB) created at Regional Tax Office (RTO) Islamabad, RTO Faisalabad, RTO Rawalpindi, RTO-II and RTO-III Karachi and RTO-II Lahore.

Besides these zones, the Federal Board of Revenue (FBR) has also created ranges of BTB in the remaining 13 RTOs to issue notices to the unregistered taxpayers. The BTB has been specifically directed to bring unregistered hospitals, educational institutions and their employees into the tax net.

The countrywide tax drive has been initiated to bring the maximum number of professions and sectors into the tax net.

FBR sends first batch of 100,000 notices to high-net-worth individuals, launches two digital apps for ST registration

As per data, the BTB zone at RTO-II Karachi has issued notices to 6,324 private schools, A-level tuition centres, pre-nursery training schools and other academies which did not exist on the tax roll. The break-up shows that the notices have been issued to unregistered 4,954 secondary schools, 869 elementary schools, 245 O & A level schools, 171 primary schools and 85 higher secondary schools.

The BTB issues two types of notices in the education sector — one to the unregistered institutions and the other to the parents of students who pay more than Rs200,000 per annum as tuition fee but did not exist on the tax roll.

The BTB zone at RTO Rawalpindi has also issued notices to the unregistered educational institutions. “We have issued several notices to bring these unregistered institutions into the tax net,” a senior tax official told Dawn. He said 166 employees of private educational institutions were also made to file their tax returns.

Member Operation Inland Revenue Service Seema Shakil told Dawn that these zones were regularly identifying non-compliant sectors and issuing notices to them. She said almost all zones had been directed to identify the unregistered educational institutions to bring them under the tax net.

Earlier, Ms Shakil disclosed at a news conference on Tuesday that the FBR had already sent the first batch of 100,000 notices to the high-net-worth individuals for bringing them into the tax net. “We will issue another 100,000 notices in the second phase,” she said.

The notices were issued after the expiry of the last date (Aug 9) for filing of returns for tax year 2018.

Ms Shakil said potential taxpayers were identified from the data already available with the FBR. The FBR has collected data of withholding, profit on debt and third-party information, including foreign travel, property transactions and vehicles purchases. The FBR has so far recovered a tax amount of Rs2.8 billion from 6,000 high-net-worth individuals.

Sales tax registration

The FBR launched on Tuesday two digital apps for sales tax registration and sales tax invoice verifications.

Member IT Mehmood Aslam said the Tax Assan App would help facilitate new tax filers for registering their application and soon after the completion of registration they would get their sales tax registration number (STRN) within seconds. He said that after getting the STRN the filers would have to go through biometric verification from National Database and Registration Authority’s authorised e-Sahulat centres within 30 days.

As per procedures, an applicant must be holder of National Tax Number (NTN). However, the applicants in individuals’ category can provide their computerised national identity card numbers.

In addition to the app, taxpayers can also file sales tax registration application through the ‘IRIS’ system. The applicant will fill simplified sales tax registration form and submit minimum documents with the application. The FBR will issue STRN immediately after the submission of documents.

Mr Aslam said a manufacturer had to submit image of the installed machinery and premises in case of manufactures’ category. The FBR will use geo-tagging for verification of the manufacturing premises.

However, Seema Shakil said the FBR could carry out post-verification of the manufacturer to avoid misuse of the facility of sales tax registration.

FBR Member Inland Revenue Policy Dr Hamid Ateeq Sarwar said the FBR had set a target to increase the number of STRN to 400,000 over the next three years. Currently, around 250,000 people are registered as sales taxpayers with the FBR.

Only 41,000 were paying sales tax, which was very low, Mr Ateeq said. “We have 100 per cent coverage from import sector and the FBR has been working on manufacturing and potential retail sector to increase its sales tax base.”

He said the FBR would focus on 4,000 big stores of different brands, including clothes and shoes, to bring them into the tax net. These brands were allowed to get only 14 pc sales tax from their customers on collection and advised the customers to check STRN before paying for their products, he added.

About the other digital app, Mr Ateeq said the customers would automatically be informed about the sales tax deduction by the FBR, adding that this app would facilitate them to know about the registered shops and brands.

Published in Dawn, August 21st, 2019