The procedure for grant of approval under section 2(36) of the Income Tax Ordinance, 2001 is governed by the relevant Income Tax Rules, 2002 (Rules 211-220B).
According to clause (g) of sub-rule (2) of Rule 211 (Income Tax Rules 2002), Non-Profit Organizations are required to furnish a detailed report with regard to
the performance of the organization for achieving its aims and objectives during the preceding financial year duly evaluated and certified by an independent
certification agency approved by an authority designated by the Government of Pakistan. In this regard, the Federal Board of Revenue (FBR) via
notification S.R.O. No. 1116(1)/2003 dated December 18, 2003 has notified the Pakistan Centre for Philanthropy (PCP) to act as a Certification Agency for abiding of rules 211 to 220B of the Income Tax Rules 2002.
Moreover, according to Rule 220A(1)(b)(vi) of Income Tax Rules 2002, in order to avail tax credit under section 100(c)
of Income Tax Ordinance 2002, Non-Profit Organizations running private universities or otherwise, are required to
furnish a detailed report with regard to the performance of the organization similar to the one referred in Rule 211(2)(g) above.
PCP Certification is based on an examination of the NPO's functioning and performance during the last three years.
Moreover, the evaluation process examines the operations of organization in the light of objectives as stated in the governing document of
the organization and certifies that the organization meets the requirements as per the set standards
agreed with the FBR. Certification by PCP is voluntary and optional does not guarantee non-profit status, as this is a matter for determination by FBR and the
relevant Commissioner of Inland Revenue.