The government is likely to bring the non-governmental organisations (NGOs) and non-profit organisations (NPOs) into the tax net in the coming budget.
Sources said on Wednesday that a number of NGOs and NPOs have not yet obtained National Tax Numbers (NTNs) and thus are not filing income tax returns. Amendment is expected in the income tax law in the 2006-07 budget to ensure strict compliance by the NGOs/NPOs.
The NPOs are established for religious, educational, charitable, welfare or development purposes or for the promotion of amateur sport. Certain NGOs/NPOs think that they are not required to file income tax return or obtain NTN and that they are exempted from income tax under the Income Tax Rules 2002, sources said.
The CBR may revise the definition of "non-profit organisation" under section 2(36) of the Income Tax Ordinance 2001 or issue procedure to ensure strict compliance.
According to the income tax department, section 2 (36) of the Ordinance has not been properly drafted, sources added.
When contacted, CBR official spokesman and Member Taxpayer Education and Facilitation Habib Fakhurddin said the NGOs/NPOs are required to obtain the NTN as well as file income tax return. Even if their income is exempt, they are bound to file returns as per laid down rules.
On the other hand, if an exempted NPO is not filing return, this does not mean that the law is not clear on the issue. Responding to a question about the numbers of NOGs/NPOs not filing returns, he said that latest data is not available, but there is a possibility that certain NGOs and NPOs are not filing returns.
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