July 30, 2024 Karachi, July 30, 2024 – The Federal Board of Revenue (FBR) has introduced significant changes to the tax exemption policies for Associations of Persons (AOPs) through amendments in the Finance Act, 2024. The new regulations, outlined in Circular No. 1 of 2024-25, amend the Income Tax Ordinance, 2001, marking a shift in the tax landscape for AOPs. Previously, the FBR said AOPs enjoyed a tax exemption on the share of a member’s income provided that the AOP itself had paid tax on its total income. However, the Finance Act, 2024, has introduced a crucial amendment to this policy. Specifically, a new proviso has been added to sub-section (1) of Section 92 of the Income Tax Ordinance, 2001, which stipulates that the tax exemption on the share of an AOP member will no longer apply if certain conditions are not met, the FBR added. According to the latest amendment, AOPs with a turnover of Rs 300 million or more will now be required to meet additional compliance requirements to qualify for tax exemption. The key condition is that such AOPs must submit their financial statements, which need to be audited by a firm of Chartered Accountants or Cost and Management Accountants. These firms must be recognized under the Chartered Accountants Ordinance, 1961, or the Cost and Management Accountants Act, 1966, respectively, according to the FBR. The FBR’s move aims to enhance transparency and accountability…