FBR fails to tax earnings of service providers

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ISLAMABAD: Interim Finance Minister Shamshad Akhtar has voiced concern with the slow pace in implementing the decision to connect professional services online with the tax machinery in eight major cities across the country.

More than three years have gone and the FBR has still not completely implemented the decision in urban cities to raise income tax from professional service providers who earn money mostly in cash and do not pay any tax on it, official sources told Dawn on Wednesday.

In August 2020, the then-tax officials announced in SRO779 that 12 categories of sales and services providers should interface with FBR to track their sales and services. Under this decision, electronic devices and software will be installed on the premises of these services.

According to the sources, the issue has also been raised at a senior level and the chairman Federal Board of Revenue (FBR) is being asked to explain why the decision has not been implemented thus far. The FBR has so far installed point-of-sale (POS) systems at large retailer locations, which is well below the intended target.

The FBR has failed to install POS at the premises of medical practitioners and consultants at a place other than a hospital or polyclinic. The consultation fee is more than Rs1,500 per patient. It was categorically notified that POS will be installed at the premises of medical practitioners and consultants in major cities like Karachi, Lahore, Islam­abad, Rawal­pindi, Faisal­abad, Multan, Gujranwala and Peshawar.

According to sources, the FBR neglected to install POS systems on the premises of these professional service providers to track their incomes at least in posh areas of the major urban cities. Doctors make a lot of money from private practice and surgeries, but there is no mechanism in place to tax their earnings.

The POS is also notified to be installed at the premises of pathological laboratories, and medical diagnostic laboratories including X-rays, CT scans, MRI etc. POS is to be installed at hospitals or med­ical care centres providing consultation, hospitalisation or other ancillary services said the notification.

According to sources, the caretaker government has taken serious notice of the FBR’s failure to implement the notified decision to increase income from these profitable areas, while tax officials are busy issuing computer notices to existing taxpayers resulting in harassment.

Published in Dawn, February 15th, 2024

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