Lahore University of Management Sciences (LUMS) has recently been granted tax exemption in the federal budget for FY 2020-21 despite collecting hefty fees from students.
Rumors have it that Abdul Razak Dawood, the adviser to the Prime Minister (PM) on Commerce and Investment who is also the Pro-Chancellor of LUMS, exercised his influence and managed to get the tax exemption for LUMS.
Though there is no official word from LUMS, Adviser to the Prime Minister on Finance, Dr. Hafeez Shaikh’s evasion of a question regarding tax exemption accorded to LUMS during the post-budget conference over the weekend has raised some eyebrows.
Moreover, it is reported that LUMS has been exempted from any documentary requirements to ensure that its Non-Profit Organization (NPO) status remains intact.
LUMS enjoys tax exemptions under the Income Tax Ordinance 2001, which states:
An NPO shall be allowed a tax credit equal to one hundred percent of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance.
Eligibility for the tax credit for educational institutes managed by non-profit organizations is defined as:
Income of a university or other educational institution being run by a non-profit organization existing solely for educational purposes and not for purposes of profit is eligible for the tax credit.
It must be noted that no institute can be granted a permanent tax exemption as per clause 36(c) of the Income Tax Ordinance 2001.
NPO status is approved for a specified period, on an application made by such a person in the prescribed form and manner, accompanied by the prescribed documents and, on requisition, such as other documents as may be required by the ordinance.
However, the Commissioner Inland Revenue of the FBR holds the authority to grant, extend, or revoke an NPO status of an organization as per Section 2(36) of the Income Tax Ordinance 2001.
This lends credence to reports that Abdul Razak Dawood, being in one of the most important positions in the government, exercised his influence over FBR to get the NPO status approved and subsequent tax exemptions for LUMS in the budget FY 2020-21.
Therefore, notwithstanding the recent unreasonable and exorbitant hike of 41% in the semester fee, LUMS will continue to enjoy tax exemptions listed in Section 100(c) of the Income Tax Ordinance, 2001.
Via: ProfitÂ
Excuse me, what? They’re a non-profit organization? Anyone with two brain cells can take one look at their fees and figure out that they’re as far from non-profit as you can get. That’s a luxury uni, tax it accordingly!
its sad to say but most of the universities in pakistan are NPO despite the fact that their fees per semester is more than 100,000 per student. they say that they are doing research with that money and expanding research facilities…lol excuse me?wth?
That’s the dilemma. But NPO does not mean that they’ll not make a profit off you.
Its just that they cant give it to their owners.
TABDEELI AAYI RE………… * zardari-hysterical-laugh.gif *
Poor quality article. Just telling the superficial stuff and not the root cause.
Not for profit does not mean that the organisation should sell at no profit no loss. It means that the “owners” shall not profit from its operations, unlike how they get distributed a share of net profit in case of companies. A single rupee disbursed to its owners and there goes its NPO status. LUMS has been getting this exemption since the beginning. Secondly, LUMS’ sponsoring organisation, NMF, is a trust. Most of the universities are NPOs. NPOs need an exemption certificate from Pakistan Centre of Philanthropy (PCP) to claim tax credit from FBR.
Once upon a time I was big fan of pro pakistani, but now I feel im having some Indian article while reading their posts. Time to boycott. Poor articles and poor management. 41% news is totally false, as one of my friend in lums told the facts.
Seems as if the article was written by a bitter kid who didn’t get into LUMS and is now trying to get his anger out on the uni.
Clownery is official on ProPakistani ?