The National Board of Revenue has decided to scrutinise books of accounts of private hospitals, clinics and diagnostic centres in the country to verify whether the entities properly deduct income tax at source and deposit the tax in the government exchequer.
Field-level offices of the NBR will carry out a special drive at the health service providing entities to verify deduction and collection of tax from different sources including payment of doctors’ fee and house rent and payment to suppliers.
There are 592 hospitals, clinics and diagnostic centres having tax registration with the Income Tax Zone-10 in Dhaka, a dedicated and specialised tax office for looking after the tax files of doctors, hospitals, clinics and diagnostics centres in the Dhaka district.
The revenue board recently made the decision at a meeting with income tax commissioners across the country, officials said.
They said that Central Intelligence Cell (CIC) of the NBR and Income Tax Zone-10 of Dhaka would conduct the activities under the provision 117A of the Income Tax Ordinance-1984.
According to the provision of the tax law, tax officials are empowered to enter the premises of a tax deducting and collecting entities to examine, monitor or verify books of accounts and relevant records in relation to deduction or collection of tax, and deposit of the tax in the government exchequer.
Hospitals, clinics and diagnostic centres are responsible for deducing tax at source, known as tax deduction at source or TDS, at various rates while making payment of doctors’ fee, employees’ salaries, payment to contractors, suppliers, catering services and procurement of goods and services. TDS is applicable at 10 per cent to payment of fees to doctors and 5 per cent to payment of house rent. Taxpayers from other parts of the country pay taxes at tax offices located in their respective areas.
Officials of the income tax zone-10, Dhaka told New Age that 592 hospitals, clinics and diagnostic centres were registered with the zone.
They, however, have no data on whether there is any unregistered business entity in the health services sector in Dhaka. They said that the level of compliance of the hospitals and clinics in terms of deduction of tax at source was very low.
The zone during March and May this year conducted drives to some renowned hospitals including LABAID Hospital, Delta Hospital, Bangladesh Eye Hospital and Prescription Point, and found dismal compliance situation in regards to tax deduction at source, they said.
The amount of TDS and the subsequent deposit in the government exchequer have increased significantly after the drives, they added.
In most cases, hospitals, clinics and diagnostic centres make cash payments of fees to doctors to evade taxes, a senior income tax official said.
Doctors are also unwilling to get payment in cheque or other formal channel to avoid taxes, he said.
He said that hospitals’ authorities informed the tax officials that doctors even threatened not to attend chambers at the hospitals or clinics if payment were not made in cash.
There are similar compliance situations in tax deduction by the entities in other sources, officials said.
Tax officials will go for massive drives in phases to other hospitals, clinics and diagnostic centres as per decision of the NBR, they said.
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