Accountancy Forum

What is the tax policy for non-profit making organizations in Pakistan ?

Goods imported by or donated to hospitals run by the Federal Government or a Provincial Government; and <b>non-profit making educational and research institutions</b> subject to the similar restrictions, limitations, conditions and procedures as are envisaged for the purpose of applying zero-rate of customs duty on such goods under the Customs Act, 1969 (IV of 1969).

am not referring to the custom duties [)]

Dear Sahar,

A number of companies established under section 42 of the Companies Ordinance, 1984, NGOs, universities, hospitals and other such institutions covered under section 2 (36) of Income Tax Ordinance 2001 have been exempted from income tax under this section and under 2nd schedule to ITO 2001.

However, as per section 113 of ITO 2001, minimum tax is applicable to all such companies/institutions unless specifically exempted from its ambit; or approval as NPO (status of NPO) has been obtained from Commissioner of Income Tax. (Previously, it was required to be obtained from Regional Commissioner).

If such a company/institution not specifically exempted from the applicability of section 113 of ITO 2001, applies and obtains the status/approval as NPO, it will, besides generality of any provision of ITO 2001 exempting its income, will also be exempted from the minimum tax that is otherwise not exempted in other cases.

For this purpose, you will have to study

- Section 2 (36) of ITO 2001 (definition of NPO),

- Section 113 of ITO 2001 (provisions regarding applicability of minimum tax)

- Clause 11 (ix) of part iv of 2nd schedule to ITO 2001 (providing exemption from minimum tax to organizations having status of NPO); and

- Chapter XVII, rules 211 to 220B of Income Tax Rules, 2002. (procedure to get approval as NPO)


This will provide you detail insight and understanding of the issue.

If you need further clarification, let me know.

Best regards,


Kamran.

Kamran Bhai... I would like to appreciate u on ur always... well defined.. explanatory answers!! I love your answers as they are 'to the point' and explanatory as well. Am not a regular poster... but regular visitor of this website... and u have made this website... sort of paradise... Here I get lot and lots of knowledge just because of people like you.. I have learnt many things from you, just example... I have developed a habbit of writing my name in the end.. of my emails.. and posts.........

Thanks Once again

Regards,
Adeel

Dear oalevel,

A human learns all his life. This is an-ongoing process. I always feel that I learn from you people as well. Even the questions posted on the forum cause us to learn through thought provoking process.

Anyways!!! Thank you for the compliments.

Best regards,


Kamran.

[)]
thnx

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Thanks Kamran Bhai</b></font id="red">