Recreation Clubs Taxability
Recreation Clubs Taxability: The Finance Act, 2025 has brought about certain amendments in the Income Tax Ordinance, 2001 (the Ordinance, hereafter). Some significant amendments are explained hereunder:
The clause (b) of sub-section (1) of section 18 of the Ordinance, which provides for taxability of income derived by cooperative societies from the sale of goods, immoveable property or provision of services to its members has been explained through earlier Act, to always include aforementioned incomes as chargeable to tax under the provisions of this Ordinance.
The scope of this explanation regarding tax on income on account of sale of goods or rendering of services by cooperative societies to its members has been expanded to say that it shall mutatis mutandis apply to recreational clubs involved in similar kind of transactions with its members.
The corresponding amendment has been made in clause (36) of section 2 of the Ordinance wherein those recreational clubs have been excluded from the definition of non-profit organizations which charge membership fee exceeding rupees one million for any class of new members as joining fee.
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