Islamabad experiences a four-year delay as the Federal Board of Revenue establishes a July 1st deadline for integrating online professional services with the national tax system.
On December 22, 2023, the initial guidelines for the plan were released. However, these guidelines were later amended by a subsequent notification, SRO428 of 2024, which introduced a specific timeline for executing the decision, starting from July 1.
A reliable authority reported that under the caretaker government, the Special Investment Facilitation Council (SIFC) became highly concerned about the lack of implementation of a scheme in urban areas. This scheme aimed to increase income tax from professional service providers who predominantly receive cash payments and evade tax obligations.
In August 2020, the tax authorities declared through SRO 779 that 12 types of sales and service providers needed to collaborate with the FBR for monitoring their transactions. Consequently, electronic systems and software were installed at their premises. Subsequently, two additional service providers, namely foreign exchange dealers/businesses and private educational institutions, were added to the list.
FBR sets July 1 deadline for service providers to connect with online system
Private educational institutions, such as schools, colleges, universities, and professional or vocational training centers, will be governed by these laws if they charge a monthly fee of over Rs. 1,000 per student.
The recent SRO from FBR on March 22 has introduced substantial changes to the criteria for service providers to be eligible for integration. In many cases, the scope of service providers has been broadened to encompass a larger number of taxpayers.
Initially, the tax initiative excluded certain establishments like restaurants, hotels, motels, guest houses, wedding venues, temporary event spaces, and clubs without air-conditioning. However, to broaden the reach of the tax campaign and include more taxpayers, these exclusion criteria have been revised.
For inter-city road travel, the threshold of having less than 10 vehicles for a travel service has been lowered to just 5 vehicles. This change will ensure more inter-city transportation falls under the tax system.
All medical professionals, such as dentists, physiotherapists, plastic surgeons, hair implant specialists, and veterinarians (animal doctors), will be integrated with the Federal Board of Revenue (FBR) without any exceptions.
The consultation fee has been lowered to over Rs500 per patient, previously being Rs1,500. Doctors generate substantial income through private practice and surgeries, yet there is no established taxation system for their earnings.
The significant update involves the inclusion of various pathological laboratories and medical diagnostic facilities, regardless of their locations or branches, in the program. Additionally, private hospitals and medical centers will now be registered with the FBR. The scheme’s coverage has been expanded to encompass health clubs, gyms, fitness centers, swimming pools, and multi-purpose clubs like Lahore Gymkhana, Islamabad Club, Chenab Club, Karachi Gymkhana, Royal Palm Lahore, Polo Club, etc., managed by either civilian or non-civilian entities.
In the updated system, photographers, videographers, and event managers who charge over Rs. 50,000 per event will be integrated with the FBR. Previously, this threshold was set at Rs. 100,000. Specifically, chartered accountants and cost and management accountants were mandated to be integrated.
