09-10-2007, 10:03 PM
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.
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.
