ISLAMABAD: Federal Board of Revenue (FBR) is considering rationalization of exemptions to charitable organizations and withdrawal of income tax exemptions (Second Schedule). Federal Board of Revenue is of the view that the tax exemptions and credits claimed by the taxpayers were contrary to the provisions of law and causing loss of government revenue.
FBR sources told Customs Today that there is no record of religious, cultural, welfare, charitable, non-profit or medical and technology promoting organizations with Federal Board of Revenue. Around 900 such organizations are registered with income tax department.
Federal Board of Revenue has viewed that they are required to be audited, however, no audit has ever been conducted. Many of these organizations carry out commercial activities too. All such organizations and trusts are required to be registered under Companies Ordinance, 1984, or trust act, 1882 or Societies registration act, 1860 or Voluntary Social Welfare Organization Ordinance, 1961.
In the medium to long run, Federal Board of Revenue may be considering to design a policy to keep a centralized record of all such organizations in coordination with all these authorities, having these organizations audited at least once in three years and bringing the commercial activities into tax net. Federal Board of Revenue has observed that exemptions and concessions under the second schedule are too many and too generous.
In the short run, income earned by IPPs, export of IT services, reduction in minimum tax liabilities to cigarette and pharmaceutical distributors and tax credit for person registered under sales tax may be withdrawn.