Tax Credit Flashcards
Tax credit for investment in shares and insurance
A resident person other than a company:
1- acquired new shares by listed public company(should be original allottee)
2- acquired sukuk of listed public company(should be original allottee)
3- acquiring unit of exchange traded fund and traded on stock exchange
4- paid life insurance premium to life insurance company registered by SECP
Formula: (A/B) * C
C is lower of:
a- cost of acquiring shares, sukuk etc
b- 20% of taxable income
c- Rs. 2,000,000
Charitable Donations (S.61)
(Description)
Description:
A person shall be entitled to a tax credit for a tax year for amount paid or property given as a donation , voluntary contribution or subscription to:
a- any board of education or any university in Pakistan established by , or under , a Federal or a Provincial law;
b- any educational institution , hospital or relief fund established in Pakistan by Federal , Provincial or a Local Government; or
c- any non-profit organization or any persons eligible for tax credit under section 100C; and
d- entities , organizations and funds mentioned in 13th Schedule of the Ordinance.
Charitable Donations (S.61)
(C is the lower of)
C is the lower of:
a- the amount of the donations in the year , including the fair market value of property given
b- where is the person is
1- an individual or AoP , 30% of taxable income
2- a company , 20% of taxable income
If amount or property is donated by associate C shall be in the Case of
1- an individual or AoP , 15% of taxable income
2- a company , 10% of taxable income.
Charitable Donations (S.61)
(Other consideration)
Other Considerations
- The fair market value of property shall be determined at the time it is given.
- Cash paid will only qualify for tax credit if amount is paid by a crossed cheque.
Contribution to approved pension fund (S.63)
(Description)
Description:
An eligible person earning income from salary or business shall be allowed a tax credit for premium paid in approved pension fund under the Voluntary Pension System Rules, 2005.
Eligible person means an individual Pakistani who holds a valid National Tax Number or Computerized NIC or NIC for overseas Pakistanis issued by NADRA.
“Approved Pension Fund” means Pension Fund approved by SECP under Voluntary Pension System Rules , 2005.
Contribution to approved pension fund (S.63)
(C is the lower of)
a- the premium paid by the person in the year
b- 20% of the taxable income of the person for relevant tax year. However, if he joins the pension fund at the age of 41 years or above he shall be allowed additional contribution of 2% per annum for each year of age exceeding 40 years (upto the 30th June , 2019). However total contribution shall not exceed 30% of the taxable income of previous year.
Contribution to approved pension fund (S.63)
(Other consideration)
The transfer by the members of old schemes of their old balance to the new individual pension account shall not qualify for tax credit.
