Business & Corporate · Section 100C · Tax Year 2026-2027
NPO & Charity Tax Calculator
A charitable organisation is not exempt — it gets a 100% credit that is all or nothing on seven conditions, and a separate 10% charge on surplus funds that applies even when the credit stands.
Section 100C(4) conditions
Checklist
Where the credit stands
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| Condition | Status |
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Section 100C(4). The credit is all or nothing: one unmet condition removes it entirely, so the checklist is the most valuable part of this page.
Step by step
How Section 100C works
The credit is conditional
100% of tax payable, including minimum and final taxes, if all seven conditions are met.
The 15% cap has two escapes
Activities begun within three years, or receipts under Rs 100 million. Either one alone.
Surplus is charged regardless
Unspent, unrestricted funds above 25% of receipts are taxed at 10% notwithstanding the credit.
Deploy or be taxed
Spending more on charitable activities during the year is what removes the surplus charge.
Reading the result
A credit you can lose entirely
The relief for a non-profit is not an exemption that applies because of what the organisation does. It is a credit that depends on meeting every condition, and it is all or nothing — failing one does not reduce the relief proportionately, it removes it.
That is the single most important thing for a charity's finance function to understand. Compliance here is not a matter of degree.
Surplus funds carry their own charge
Money received and not spent within the period allowed can attract a charge of its own. Organisations that raise successfully and disburse slowly — often for good operational reasons, such as a multi-year project — can find themselves taxed on funds they fully intend to use.
Where funds are genuinely restricted by the donor to a future purpose, the treatment differs, which makes donor documentation worth keeping carefully rather than informally.
Administrative expenditure is capped
There is a ceiling on the proportion of receipts that may go on administration. A small organisation with one office and two salaries can breach it simply because its total receipts are low, not because it is inefficient.
Where this stops
This computes the position from figures you enter against the conditions as recorded. Approval status, and whether a particular cost counts as administrative, are determinations that rest with the Commissioner.
FAQs
NPO and charity tax FAQs
Is a registered NPO simply exempt from tax?
No. Section 100C does not exempt the income — it gives a tax credit equal to 100% of the tax payable, including minimum tax and final taxes. The distinction matters because the credit is conditional. If any one of the seven conditions in Section 100C(4) is not met, the entire credit is lost rather than reduced, and the organisation pays tax like anyone else.
What are the conditions?
Return filed; tax required to be deducted or collected actually deducted or collected and paid; withholding statements for the relevant tax year filed; administrative and management expenditure within 15% of total receipts; the Commissioner's approval under Section 2(36) obtained; no asset conferring a private benefit on donors, the author or their family; and a statement of voluntary contributions and donations for the immediately preceding year filed.
Is the 15% administrative expenditure cap absolute?
No — the proviso disapplies it if charitable and welfare activities commenced for the first time within the last three years, or if total receipts for the year are under Rs 100 million. The statute says "or", so either limb alone is enough. A young or small organisation is therefore not caught by the cap at all.
What are surplus funds and why am I taxed on them?
Section 100C(5) taxes surplus funds at 10%, and it opens with "notwithstanding sub-section (1)" — so it applies even when the 100% credit is fully available. Sub-section (6) defines them as money not spent on charitable and welfare activities during the year, received in the year as donations, voluntary contributions, subscriptions and other income, which is more than 25% of total receipts, and which is not restricted. The policy is to stop organisations accumulating donations rather than deploying them.
What counts as restricted funds?
Funds the organisation received but could not spend and treat as revenue during the year because of an obligation placed by the donor, plus funds received in kind. They are excluded from the surplus calculation, which is why the field is separate here.
Is the 10% charged on all the unspent money or only the part above 25%?
The drafting will support an argument either way and the difference is large. Sub-section (6) lists "more than twenty-five percent of the total receipts" as one of four characteristics that make funds surplus, which reads as a qualifying test rather than a slice — so the primary figure here charges the whole unspent unrestricted amount once the test is crossed. The narrower excess-only figure is shown beside it. Take advice before filing on the basis of either.
Does the credit cover minimum and final taxes?
Yes — Section 100C(1) says so explicitly, which is unusual and valuable. Minimum tax under Section 113 and final taxes that would otherwise be unavoidable are both within the credit, provided the conditions are met.
Which organisations does this apply to?
Persons listed in Table II of clause (66) of Part I of the Second Schedule, approved welfare trusts for ex-servicemen and government employees, trusts generally, welfare institutions registered with a provincial or ICT social welfare department, and not-for-profit companies registered with the SECP. Approval under Section 2(36) is itself one of the conditions.
Related tools
Giving to one of these organisations?
A donor gets their own credit under Section 61, with its own ceilings.
Open Donation Tax Credit Calculator