Clause 94 - Consequences of conversion of a non-profit organisation - Direct Taxes Code Bill, 2009

Consequences of conversion of a non-profit organisation 94. (1) A non-profit organisation shall be liable to income tax at the rate of thirty per cent. in respect of its net worth if,- (a) it converts into any form of organisation which does not qualify as a nonprofit organisation; or (b) it ceases to be a non-profit organisation in the financial year and any two financial years out of four financial years immediately preceeding the relevant financial year; (c) fails to transfer, upon its dissolution, all its assets to any other non-profit organisation. (2) For the purposes of this section,- (a) net worth shall be computed as on,- (i) the date of conversion of the non-profit organisation in a case falling under clause (a) of sub-section (1);and (ii) the last day of the financial year in a case falling under clause (b) of subsection (1); (b) net worth means the aggregate value of the total assets of the non-profit organisation as reduced by the value of liabilities of the organisation; (c) the value of the total assets and liabilities shall be computed in accordance with the rules of valuation prescribed in this behalf.