FBR flags alleged large-scale tax evasion in medical sector
ISLAMABAD: The Federal Board of Revenue (FBR) has disclosed what it describes as widespread alleged tax evasion in Pakistan’s medical sector, revealing that nearly 60 percent of registered doctors did not file income tax returns this year, according to official findings shared with senior government authorities.
The development marks a significant escalation in the government’s scrutiny of healthcare professionals and institutions, with the matter reportedly reaching the Prime Minister’s Office (PMO), underscoring its growing policy and governance implications.
Nationwide scrutiny reveals major compliance gaps
According to the FBR, a nationwide review of doctors, dentists, private clinics, and diagnostic healthcare institutions has uncovered substantial discrepancies between declared income and actual earnings, pointing to systematic underreporting and non-compliance within parts of the sector.
Officials said further analysis of filed tax returns reinforced concerns that alleged tax evasion in the medical field is occurring on a large scale and increasing over time, prompting deliberations on stricter enforcement mechanisms.
The health and education sectors were placed under enhanced scrutiny after being identified by the FBR as major recipients of public and private funding, warranting closer oversight of tax compliance.
POS systems and resistance from healthcare providers
Under Section 175C of the Income Tax Ordinance, the FBR is legally empowered to mandate the installation of Point of Sale (POS) systems in hospitals and private clinics to improve income documentation and transparency.
However, officials acknowledge that the medical sector has largely resisted POS implementation, citing operational, ethical, and service-delivery concerns. This resistance has become a key point of contention between tax authorities and healthcare stakeholders.
Earlier backlash from Pakistan Medical Association
The latest revelations follow strong opposition from the Pakistan Medical Association (PMA), which had earlier expressed grave concern over an FBR directive issued by the Regional Tax Office Faisalabad targeting doctors, clinics, and hospitals for what the association termed aggressive tax enforcement and surveillance.
In a letter dated December 2, 2025 (Ref No. 987), the FBR described the medical sector as “obscuring true income” and ordered detailed surveys of patient fees, surgery volumes, and forced audits under Section 177 and Section 175C.
The PMA rejected the characterization, arguing that the directive amounted to harassment rather than compliance facilitation.
Policy crossroads for tax enforcement and healthcare access
With the FBR now asserting that alleged tax evasion in the medical sector is widespread and growing, authorities are weighing stronger enforcement measures, while professional bodies warn of unintended consequences for healthcare delivery.
The unfolding situation highlights a delicate policy challenge: balancing fiscal accountability with the sustainability of essential health services, especially at a time when Pakistan’s healthcare system is already under significant pressure.
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