Withdrawal of exemption to income of a modaraba engaged in the manufacturing business [Section 100C (2)(e)]

Withdrawal of exemption to income of a modaraba: Certain non-profit organizations, trusts and welfare institutions as specified in sub-section (2) of section 100C of the Income Tax Ordinance,2001 are entitled to a tax credit equivalent to 100% of the tax payable (including minimum and final taxes) upon fulfillment of certain conditions delineated in sub-section (1) of section 100C of the Ordinance including filing of income tax return, filing of withholding tax statements, fulfillments of obligations as a withholding agent, ensuring that administrative and management expenses does not exceed 15% of the total receipts etc.

Prior to the passage of the Finance Act, 2018 profit on debt from scheduled banks constituted one of the incomes entitled to 100% tax credit under section 100C of the Income Tax Ordinance, 2001.

In order to promote and encourage microfinance banks, appropriate amendment has been made in clause (e) of sub-section (2) of section 100C of the Ordinance whereby income representing profit on debt from microfinance banks shall also be entitled to 100% tax credit under section 100C of the Ordinance upon fulfillment of the conditionalities deleniated in sub-section (1) of section 100C of the Ordinance.

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