Wednesday, 17 September 2014
Non-profit organisations (NPOs), also usually known as non-governmental organisations (NGOs), have generally been operating freely in the country and hardly any questions were asked from them. Of late, however, some of their activities have been subjected to criticism by certain sections of society. In a move to regulate them properly, the Federal Board of Revenue (FBR) has now made it mandatory for NPOs to provide details of funding, including those from donors, to avail income tax exemptions. In order for the NPOs to avail tax rebates, various documents have to be provided to the FBR under the Standard Operating procedure (SOP) which include Memorandum of Article of Association, Trust Deed or Rules or By-laws for the operation of an NPO. It must also be declared that the said entity was not run simultaneously for commercial purpose. Exemption certificates will only be issued by the FBR after details of donors were provided as prescribed under Income Tax Rules, 2002. Besides, NPOs, are required to provide a list of beneficiaries of Rs 5,000 and above and FBR officials would examine the salary statements submitted by the NPOs to ensure that the board of governors, directors and trustees are not using the organisation for personal gains. Statements of accounts of NPOs would also be screened to ensure that funds were not used for some other purpose. In the case of universities and other educational institutions, details of investment like in vehicles and premises would be obtained for record. NPOs will only avail exemptions on those incomes whose financial details were available. In the case of missing facts or figures, NPOs will have to pay 100 percent tax liability.