FBR plans action against school owners whom under-declare income to evade taxes

KARACHI: As the last date to avail Amnesty Scheme is over, Federal Board of Revenue (FBR) has started nabbing tax evaders, and a campaign is planned against persons running multiple educational campuses, who had been under-declaring their revenues.

Sources said data had been compiled of persons who are running multiple campuses of established schooling systems such as ‘The Educators’ and ‘Smart School’ etc. Sources said several persons had been identified who were under-declaring their revenues to evade government taxes.

 

The FBR will start taking legal action against scores of tax evaders after the government’s amnesty scheme came to an end on July 3. The FBR had already issued directives to the departments concerned to collect the relevant information about wealthy tax evaders.

An official said the tax department found a number of schools through physical surveys, but most of them are not registered with the tax authorities. Many of them charge huge fees, but their tax contribution is none.

Several persons who are running multiple campuses of established brands such as ‘The Educators’ and ‘Smart School’ grossly under-declare the number of pupils in their campuses as well as mis-declare the income. These persons are not only defrauding the government exchequer, they also defraud the mother organization to avoid royalty payments.

In March, the broadening of tax base wing of RTO-II Karachi conducted surveys of schools / educational institutions in order to verify their registration with the income tax department.

The special teams of the tax office visited various localities of the city to verify the tax status of the schools, pre-schools/Montessori, colleges and educational / tuition centers. The survey also collected details of fee structures of schools to match the data with the details to be obtained from provincial education department.

The official said physical surveys found enrollment/presence of over 700-800 pupils in certain campuses, but the owners of these campuses had mentioned a much lower number of pupils in the books. The tax authorities have also found evidence of school owners’ involvement in money laundering and unauthorized flight of foreign exchange.

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