Islamabad, August 10, 2025 – The Federal Board of Revenue (FBR) has issued a revised definition of a non-profit organization for taxation purposes in the tax year 2025-26, aiming to bring more clarity and transparency to the sector.
According to the FBR, a non-profit organization is defined as any entity, other than an individual, which is:
(a) Established for religious, educational, charitable, or welfare purposes for the general public, or for promoting an amateur sport, excluding recreational clubs where the membership joining fee for any class of new members exceeds one million rupees.
(b) Formed and registered under any relevant law as a non-profit organization.
(c) Approved by the Commissioner for a specified period upon application, submitted in the prescribed form with required documents, and providing any additional records requested by the Commissioner.
The FBR further clarified that the assets of such an organization must not confer, or have the potential to confer, any private benefit to individuals or entities outside its stated charitable or public welfare objectives.
This updated definition by the FBR is intended to strengthen regulatory oversight, ensure only genuine entities qualify as a non-profit organization, and prevent misuse of tax exemptions. By clearly outlining the criteria, the FBR aims to promote compliance and enhance public trust in the operations of the non-profit sector.