KARACHI: The Federal Board of Revenue (FBR) has collected a record tax collection on school fee of Rs3.84 billion, rising 24 percent in FY18.
Increase in education costs and effective watch by tax officials helped in raising tax collection on school fee, remarked FBR officials, reports The News.
Data on withholding tax disclosed the tax regulator collected Rs3.84 billion in FY18 against Rs3.1 billion in FY17.
According to FBR officials, the rise in revenue collection was made possible by an increase in tuition fees by educational institutions in FY18.
As per the tax law, the educational institutions need to subtract withholding tax at 5 percent on an annual fee of or over Rs200,000 as deposited by parents or guardian of parents.
In the Finance Act 2013, the previous government introduced this provision of withholding tax on school fee to bring affluent individuals who can afford the higher fee for the schooling of their children into the tax net.
Also, the tax is adjustable against the total liability in a year for a taxpayer who files yearly income tax return.
This withholding tax on school fee is only applicable on Pakistani residents and non-resident and foreigners are provided an exemption from this levy provided they submit their passport as evidence they live in Pakistan for less than 180 days.
Also, these non-resident and foreigners are required to submit a certificate stating they have no source of income in Pakistan and the fee is directly remitted from overseas via official banking channels.
And one source said, “The FBR was also tightening the noose around affluent people who had sent their children abroad for educational purpose.”
This stipulation was incorporated via the Finance Act 2015 and posted 22 percent growth in FY18.
The withholding tax collection under this head rose to Rs364.72 million in FY18 against Rs299 million collected in FY17.
