ISLAMABAD, Aug 31: The Central Board of Revenue has amended the income tax rules to delegate powers to the regional commissioners of income tax (RCITs) in relaxing conditions or approval for granting exemption from income tax to non-profit organisations.

The amendments were made through an income tax notification SRO880 of 2006 issued here on Thursday by amending the income tax rules 2002.

According to the amendments, the approval for exemption granted under rule 220A (2) will remain in force for subsequent years unless withdrawn under sub-rule (7) of rule 220A.

However, the CBR restricted the surpluses or monies validly set apart, excluding restricted funds, up to 25pc of the total income of the year. The restricted funds mean any fund received by the organisation but could not be spent and treated as revenue during the year due to any obligation placed by the donor.

Provided that such surpluses or monies validly set apart are invested in government securities, NIT units, a collective investment scheme authorised or registered under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, mutual fund, a real estate investment trust approved and authorised under the Real Estate Investment Trust Rules, 2006, or scheduled banks.

The CBR has done away with sub-rules (4), (5) and (6). However, the sub-rule (7) was substituted with a new one which empowers the RCITs instead of the CBR to withdraw approval for exemption from any non-profit organisations.

The withdrawal would be subject to conditions in case the RCIT was not satisfied with the constitution, memorandum and articles of association, trust deed, rules and regulations or bye-laws, as the case may be, specifying the aims and objects of the organisation do not provide for prohibiting the making of any changes in the constitution, memorandum and articles of association, trust deed, rules, regulations and bye-laws without prior approval of the regional commissioner.

The organisation has been or is being used for personal gain of any particular person or a group of persons; been propagating the view of a particular political party or a religious sect; been or is being managed in a manner calculated to personally benefit its members or their families; or has not been, or will not be, able to achieve its declared aims and objects in view of its setup, administration or otherwise as evaluated and certified by an independent certification agency; failed to give valid reasons for setting apart, or not utilizing, or accumulating surpluses, excluding unrestricted funds, in excess of 25 per cent of the income for the year; failed to file the return of income supported with the necessary documents.