Tax exemption granted to LUMS (by PTI) raises eyebrows - 2020

[Pakistan Ka Beta]

Tax exemption granted to LUMS raises eyebrows
By
Ariba Shahid

June 15, 2020

KARACHI: During the annual post-budget press conference on Saturday, the Adviser to the Prime Minister on Finance, Dr Hafeez Shaikh avoided a question regarding the individual that lobbied for a tax exemption to LUMS University, considering the significant fee it charges from students.

The aversion to the question demonstrated by the government has added to the rumors.

Sources allege that the university has been exempted from any documentary requirements needed to maintain its Non-Profit Organization (NPO) status.

Sources further alleged that Razzak Dawood, being the ProChancellor of LUMS and an adviser to the Prime Minister (PM) Imran Khan has had some influence over the decision.

Considering LUMS’s NPO status, the university enjoys certain tax exemptions as per the Income Tax Ordinance, 2001. As per the ordinance, 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”

However, this is subject to certain conditions that require thorough documentation periodically.

As per the Income Tax Ordinance, “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;” are eligible for the tax credit.

The decision, however, of granting NPO status lies with the commissioner Inland Revenue as per Section 2(36) of the Income Tax Ordinance, 2001.

This means that the decision lies strictly within the hands of the Federal Board of Revenue and is between the board and the NPO in question.

Sources alleged that Razzaq Dawood exercised his influence on FBR officials to get the LUMS NPO status approved.

However, it is pertinent to note that the ordinance does not grant an NPO a permanent tax exemption.

Instead, it is for a specific time as per clause 36(c) which states that the NPO status is “approved by the commissioner 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 commissioner.”

Hence, as long as LUMS remains an educational institution it is entitled to a tax exemption given it meets the periodical requirements mentioned in section 100c of the ordinance.

While questions have been raised about whether LUMS can be given an NPO status given the fee it charges, the application of clause 66(2) from the Income Tax Ordinance on LUMS will further add to the regulations in light of the exemption.

Earlier, the LUMS administration had also been criticised for increasing the tuition fee up to 41 percent over last year for certain students, with students and parents raising questions on the legitimacy of its NPO status.


https://profit.pakistantoday.com.pk/2020/06/15/tax-exemption-granted-to-lums-raises-eyebrows/

 

[Sheikh Rauf]

insane!
good uni but for brite elite.

 

[blueazure]

insane!
good uni but for brite elite.

LUMS = highway robbers

and now agencies are all over them thanks to their militant activities ( PTM and BLA activism)



their business graduates are snobs, good for middle level management only /-

 

[Aspen]

The only good thing that has come out of LUMS is Umar Saif

 

[S.Y.A]

Waah, if its true then super lanat on PTI and hafeez sheikh.

 

[Sheikh Rauf]

LUMS = highway robbers

and now agencies are all over them thanks to their militant activities ( PTM and BLA activism)



their business graduates are snobs, good for middle level management only /-

Agreed.

 

[Bouncer]

insane!
good uni but for brite elite.

LUMS = highway robbers
and now agencies are all over them thanks to their militant activities ( PTM and BLA activism)
their business graduates are snobs, good for middle level management only /-

Definitely a great business school and their alum are all over the world. But this recent PC culture will be their undoing. Same thing happened to once great public sector universities like PU, KU, QAU etc. Students can either excel at academics or politics. Research, merit, competition and hardwork have been replaced by sectarian politics at these universities long time ago. And results are visible. Most of their students are third class and unable to compete at the international stage. LUMS is a burger heaven so they naturally copied West and their PC culture instead of local politics.

 

[El Sidd]

 

[Syed1.]

It was granted by PML-N in their last budget

Matlab even Noon league's follies are put under PTI. Hadh hai yaar. This country deserves to be looted and plundered and raped by everyone.

https://twitter.com/x/status/1272167835045892096

Waah, if its true then super lanat on PTI and hafeez sheikh.

Before sending lanat on PTI, send two on your own face for abusing someone based on false knowledge.

 

[Crusher]

It proves once again that this government is of the mummy daddy class and for the mummy daddy class.

 

[The Accountant]

All those commented on above has no knowledge of NPO. Its not an expemption for LUMS but for all the organization following under the category.

In the category the sponsor or owners will not get any profit of the organization but it will be reinvested back to organization hence profit can only be used on following activites:

1. payment to teachers and other expenses.
2. funding research projects
3. Scholorships
4. further extension of university

Regarding FBR. Does any single person of you having any experience of dealing with FBR? I deal with them daily and they dont entertain even any genuine requests without speed money hence for each and every case we have to go to court but getting status of NPO cant be done through court.

So if Razzaq Dawood is using his status to get this status then its the only solution however you need to understand that tax will be exempt only if they get reinvested into business and cant be paid to owner hence this is totaly justified and option is available to any other university.

With respect to exercising influence, we business professionals are raising our issues to Razzaq Dawood and he is trying to sort them out. Recent example is reduction in sales tax rates for digitally integrated retailers to 12%. Now honest tax payers will be paying 12% sales tax as we have digitally integrated our POS with FBR and they are getting each and every invoice and sales tax directly whereas un-integrated retailers have to pay 17% tax.

So please refrain from comment or forming an opinion about matters you don't know..

 

[S.Y.A]

Before sending lanat on PTI, send two on your own face for abusing someone based on false knowledge.

That is why I said "if true". You should learn to read you know. Secondly, pti walay aap k chachay maamay lagtay hain?

 

[darksider]

Here’s How LUMS Allegedly Got Tax Exemptions Despite Charging Hefty Fees

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.
https://propakistani.pk/2020/06/15/...t-tax-exemptions-despite-charging-hefty-fees/

That is why is said "if true". You should learn to read you know. Secondly, pti walay aap k chachay maamay lagtay hain?

Yaar Imran khan ko vote dey kar b humhi jhootey hain bas maan jaya karo.
Yeh sab itna kuch kar k b sachey hain.

 

[airmarshal]

The tax exemption was provided by PMLN govt. It cant be lifted without proper documents. The current govt has asked LUMS to provide documents to justify tax exemption. It has not favored LUMS, nor it should.

 

[Syed1.]

Here’s How LUMS Allegedly Got Tax Exemptions Despite Charging Hefty Fees

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.
https://propakistani.pk/2020/06/15/...t-tax-exemptions-despite-charging-hefty-fees/



Yaar Imran khan ko vote dey kar b humhi jhootey hain bas maan jaya karo.
Yeh sab itna kuch kar k b sachey hain.

What part of PML-N gave them 'not for profit organization' did you not get?