PESHAWAR: The Lady Reading Hospital, a public sector medical teaching institution in the provincial capital, has stopped paying the Federal Board of Revenue sales tax on electricity and gas charges as well as on the revenue generated by the Sehat Sahulat Programme after ‘learning’ about exemption from these levies.

The LRH administration has planned to ask the FBR to adjust the sales tax it’d paid from 1990 to Nov 2017 in its next utility bills.

“We have been paying about Rs5 million every month as sales tax on electricity and sui gas to the FBR since 1990 but stopped it after finding that under the relevant law, the hospitals enjoy exemption,” LRH director (finance) Javed Khan Afridi told Dawn.

According to him, the FBR had accepted their plea and would be issuing a tax exemption certificate shortly.

Hospital stops paying that levy on SSP revenue, power, gas charges after ‘learning’ about exemption

The director said the certificate would help us to save amount to the hospital in lieu of taxes on charges of internet and telephone etc.

“Wapda and Sui Northern Gas Pipelines Limited have stopped receiving withholding taxes from our hospital and that amount was being diverted to patient care,” he said.

Mr Javed however said the hospital would continue to pay taxes on salaries and services to the FBR.

He said the law regarding tax exemption existed but remained far from being implemented until November last year when the hospital moved an application in the FBR pinpointing the exemption clause.

The official said Clause 52-A of the Schedule 6 the Sales Tax Act 1990 says that goods supplied to hospitals run by federal or provincial governments or charitable operating hospitals of 50 beds or more or the teaching hospitals of statutory universities of 200 or more beds, stay exempted from sales tax.

“But our hospital has mistakenly paid million of rupees in this respect,” he said.

The FBR, which had received 17 per cent sales tax on electricity and gas charges, will be formally requested to adjust the overpaid amount to the hospitals by making deduction in phase wise manners from our coming bills, he said. It comes to huge amount because the bills of these utilities were about Rs25 million per month, he said.

“Our taxation record is very clear due to which the FBR is cooperating in such matters. We are fully complying with the law to ensure saving money for improvement of patients’ care,” he said.

The exemption certificate, to be issued by the FBR, would be produced in other matters, to save millions of rupees in taxes, he said.

Not only the hospital has stopped paying withholding taxes to Wapda and SNGPL but also on revenue generated from the Sehat Sahulat Programme (SSP) under which the provincial government paid for the treatment of patients through State Life Insurance Corporation (SIC) to the designated hospitals.

“Initially, we have paid Rs2 million tax to the FBR on the income generated from the SSP but now we have stopped it after finding that the hospitals couldn’t be taxed,” said LRH medical director Prof Mukhtar Zaman Afridi.

He said the hospital had saved Rs25 million in taxes.

“As per FBR’s requirements, we produced a No Objection Certificate from the KP health department and sought exemption from taxes which was accepted,” he said.

Prof Mukhtiar said the amount saved would be used on patient care as the 1750-bed hospital was heavily loaded with poor patients, who required free care.

Published in Dawn, February 20th, 2018