Clause 101 - Consequences of conversion of a non-profit organisation. - Direct Taxes Code, 2010

Consequences of conversion of a non-profit organisation. 101. (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 non-profit organisation; (b) it merges with any form of organisation which does not qualify as a nonprofit organisation; (c) it fails to transfer upon dissolution all its assets to any other non-profit organisation, within a period of three months from the end of the month in which the dissolution takes place. (2) In this section— (a) net worth of the non-profit organisation shall be computed as on— (i) the date of conversion or merger, as the case may be, in a case falling under clause (a) or clause (b) of sub-section (1); and (ii) the date of dissolution in a case falling under clause (c) of sub-section (1); (b) "net worth" of the non-profit organisation means the aggregate value of the total assets of the non-profit organisation as reduced by the liabilities of such organisation computed in accordance with such rules of valuation as may be prescribed.