Income Tax 2025

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Specified income. ​

337 ​

The specified income of a registered non-profit organisation shall mean the income as specified in column B of the Table below and shall be taxable in the year provided in the column C thereof:–– --Table--

Explanation

Section Summary: ​

Section 337 of the new income tax law defines "specified income" for registered non-profit organizations (NPOs). It specifies which types of income are taxable and the year in which they are to be taxed. This section is crucial for NPOs to understand their tax obligations and ensure compliance.

Key Changes: ​

  1. Clarification of Taxable Income: The section explicitly lists the types of income that are considered "specified income" for NPOs, which may not have been as clearly defined in the prior income tax law.
  2. Taxation Timeline: It introduces a clear timeline (year of taxation) for each type of specified income, ensuring NPOs know when their income becomes taxable.

Practical Implications: ​

  1. For NPOs: Registered non-profits must now carefully categorize their income to determine which falls under "specified income" and ensure timely tax payments.
  2. Compliance Burden: NPOs will need to maintain detailed records of their income streams to align with the specified categories and taxation timelines.
  3. Impact on Tax Planning: NPOs may need to adjust their financial planning to account for the tax liabilities arising from specified income.

Critical Concepts: ​

  1. Specified Income: Refers to specific types of income earned by NPOs that are now explicitly taxable under this section. The exact types are listed in the table (column B).
  2. Year of Taxation: The year in which the specified income becomes taxable is provided in column C of the table. This ensures clarity on when the tax liability arises.

Compliance Steps: ​

  1. Identify Specified Income: Review the table in Section 337 to determine which income streams qualify as specified income.
  2. Maintain Records: Keep detailed records of all income, categorizing them as per the table.
  3. Timely Tax Payment: Ensure tax payments are made in the year specified in column C of the table.
  4. File Returns Accurately: Include specified income in the appropriate year's tax return to avoid penalties.

Examples: ​

  1. Scenario 1: An NPO earns rental income from a property it owns. According to the table, rental income is listed as specified income, and it is taxable in the year it is received. The NPO must report this income in its tax return for that year.
  2. Scenario 2: An NPO receives a grant for a specific project. If the grant is categorized as specified income in the table, the NPO must pay tax on it in the year specified (e.g., the year the grant is utilized).

This section provides clarity for NPOs on their tax obligations, ensuring they can plan and comply effectively.