Healthcare service providers are set to come under the scanners of the tax authority for checking tax evasion through verification of their deposit of tax at source to the public exchequer.
The National Board of Revenue (NBR) at a recent meeting has taken a decision to scrutinise the tax files and books of account of the hospitals, clinics and diagnostic centres in this regard, officials said.
As part of the move, the board has instructed the field-level tax officials to verify their tax at source, known as withholding tax, deduction and collection.
Both the Central Intelligence Cell (CIC) and the Income Tax Zone-10 of Dhaka will jointly conduct scrutiny under section 117A of the Income Tax Ordinance-1984.
Tax zone-10 is a dedicated zone in Dhaka to monitor and collect taxes from healthcare service providers and doctors in the capital city.
A senior tax official said healthcare service providers have been authorised to deduct and deposit tax at source from payment to suppliers, doctors' fees, house rents, salaries to employees, payment to contractors, catering services and procurement of goods and services.
TDS (tax deducted at source) is applicable at 10 per cent on payment of fees to the doctors and 5.0 per cent on payment of house rents.
The official said there are 592 hospitals, clinics and diagnostic centres in Dhaka, having tax registration.
But they have no data on how many hospitals, clinics and diagnostic centres are tax registered across the country. Except Dhaka, other healthcare service providers are paying taxes in a scattered way under different zones outside the capital.
As per the law, tax officials are empowered to inspect the tax-deducting entities by entering their premises.
They examine, monitor or verify books of account and relevant records relating to deduction or collection of tax, and deposit of tax to the government exchequer.
Field-level tax officials said they have found poor tax compliance of healthcare service providers, especially hospitals and clinics as those often make different payments in cash to avoid taxes.
During two separate drives in March and May 2019, the taxmen of the zone inspected some hospitals including Labaid Hospital, Bangladesh Eye Hospital, and Delta Hospital etc.
They found anomalies in deduction and payment of tax at source from doctors' fees and other services.
After the drives, tax collection from these entities increased significantly, the tax officials said.
They said healthcare service providers, especially hospitals and diagnostic centres, made huge profits in last six months following dengue outbreak across the country.
However, payment of withholding taxes by the entities does not reflect their growth in business.
Taxmen said the government is not getting its due taxes from healthcare service providers due to a significant amount of unrecorded cash transactions at the time of making payments.
There is a number of withholding tax deducting entities in the public and private sectors which are bound to deduct and deposit taxes.
Under the provision of the income tax law, those entities must submit withholding tax returns twice a year.