ISLAMABAD: The Supreme Court has ordered all upscale private schools to reduce their fees by 20 per cent. A three-member bench, headed by the Chief Justice of Pakistan (CJP) Mian Saqib Nisar, issued the order on Thursday while hearing a case against excessive fees charged by 21 private schools.
The bench, also comprising Justice Ijazul Ahsan and Justice Faisal Arbab, directed the Federal Board of Revenue (FBR) to scrutinise tax records of the directors of the schools.
The schools have been allowed a 5 per cent increase in fee every year. However, with the permission of the regulator, a school in a special case may raise fees beyond 5 per cent but not more than 8 per cent.
In its order, the apex court also directed the 21 private schools to either return 50 per cent of the fees collected for the two-month summer vacations within two months or adjust the amount.
No school will be allowed to shut down its operations in the wake of the order, or to expel students. Doing so will be considered a direct contempt of the court order, said the order.
In an earlier hearing, the bench had sought forensic audit of private schools accounts. The top judge had remarked that private schools are charging fees according to their whims and wishes, adding that education is not a product which can be put up for sale.
The decision was taken after the Auditor General of Pakistan (AGP) presented an audit report on accounts of the 21 private schools. The report said all schools increased the fees not because of inflation but to increase profits of the owners who are the main beneficiary of such hikes.
The report said almost all schools hid their profits using different techniques. Owners prefer to withdraw their profits as remunerations which attract only 26 per cent tax as compared to 45 per cent which would be required to be paid in case the same amounts were withdrawn as dividends.
“The main techniques used for exaggerating expenses have been to pay out unreasonably high remunerations to the CEO/directors; take out earnings from schools and borrow funds…” The AGP report recommended that cash transactions for school fee may be completely forbidden. Likewise, no summer fee may be allowed, it said.