KARACHI: The Federal Board of Revenue (FBR) has framed multiple conditions for non-profit organizations (NPOs) in order to get exemption certificate and rebate under new regime of tax credit in accordance with the Income Tax Ordinance, 2001.
Karachi Tax Bar Association (KTBA) On Wednesday said in a letter, FBR has observed that there are number of NPOs who are not operating according to law and rules as framed previously.
In this connection, FBR has stipulated conditions to NPOs for obtaining tax credit including memorandum and articles of associations, trust deed and rules or by law of the NPOs (company, trust, welfare society), as the case may be, must provide for the operation of entity on non-profit basis and not allow to be run simultaneously for commercial purposes.
The FBR’s another condition is that the statement of accounts of a NPOs and there is no dissipation of funds or expenditure for any other purposes.
Another condition, “Income deriving from donations, contributions and subscriptions, it must be ensured that applicants have provided complete details of the donors in terms of rule 217(vi)(b) of the Income Tax Rules, 2002.”
NPOs to get exemption certificate, the taxpayers must provided list of beneficiaries of Rs 5000 and above in terms of the requirements of Rule 217(vi)(c) of the Income Tax Rules, 2002.
FBR‘s another condition is that salary statement of the NPOs must be examined to ensure that board of governors/directors and trustees do not use organization for personal gain/benefit.
To get tax credit, details of bank accounts maintained by the NPOs must be obtained, examined and placed on record.
“In case of universities and educational institutions, details of investment must be obtained for records like vehicles, structures and so on,” the FBR imposed condition on NPOs.
List of the members of BOG/BOD and trust must be obtained and got verified from regulators like Security Exchange Commission of Pakistan (SECP) Registrars and so on.
FBR said, “Inspection of NPOs record maintained with regulators such as SECP may be looked into for any changes incorporated in the constitution, objectives, rules or regulations made without prior approval of CIR in terms of Income Tax Rules and adverse inference should be drawn.”
Details of money set apart or kept un-utilized may also be examined in relevant cases in terms of Rule 217(1)(iv)(d) of Income Tax Rules, 2012.
Another condition of FBR, latest performance evaluation report from an accredited institution such as PCP must be obtained to ensure that NPOs are fulfilling their stated objectives.
FBR further added that for obtaining tax credit in cases of educational institutions and universities details of contributions made to NPOs and list of the students to whom scholarships are awarded must be examined and suitably verified.