FBR excludes recreational clubs from non-profit status under Finance Act 2025

The Federal Board of Revenue (FBR) has excluded recreational clubs from the definition of non-profit organisations under the Finance Act 2025.

According to the FBR’s details on the Finance Act 2025, an amendment has been made to Section 18 of the ordinance. This section outlines the taxability of income earned by cooperative societies through the sale of goods, immoveable property, or services provided to their members. 

The provision, previously applied to cooperative societies, now also applies to recreational clubs engaged in similar transactions with their members.

The FBR has clarified that this explanation regarding the tax on income generated from sales or services will apply to recreational clubs involved in such activities. 

An additional amendment has been made to Section 2 of the ordinance, specifically clause (36), excluding recreational clubs that charge a membership fee exceeding Rs1 million for new members as joining fees from the non-profit category.