Tax Credits Chapter- 15
Income 8 50,000
Computation of tax liability:
Tax on Rs. 450,000 16 , 250
No tax credit shall be allowed as donation was made to unapproved institution.
(b) & (c) Mr. Qaiser
Computation of taxable income and tax liability: Rs.
Income 8 50,000
Computation of tax liability:
Tax on Rs. 8 50,000 16 , 250
Less: Tax credit on donation:
Tax credit shall be allowed on lower of:- Actual amount of donation i.e. Rs. 10,000
- 30% of taxable income i.e. Rs. 255 ,000
Tax credit (10,000 x 16 , 25 0 / 850,000) 191
Tax liability 16,059
- Tax credit for investment in shares and insurance (Section 62) – Omitted by FA, 2022
A resident person (other than a Company) shall be entitled to a tax credit for a tax year either;
(A) Investment in shares
(a) new shares of listed company on a stock exchange in Pakistan provided the resident
person is the original allottee of the shares or the shares are acquired from the
Privatization Commission of Pakistan
(b) The Ordinance is silent hence higher of the above two shall be considered for tax credit
purposes. Provided shares are required to be held for at least 24 months from the date of
purchase but if a person disposes of shares within 24 months then the amount of tax
credit allowed shall be added in the tax payable of the tax year in which shares were
disposed of.
OR
(B) Investment in Sukuks
In respect of cost of acquiring in the tax year, sukuks offered to the public by a public company
listed and traded on stock exchange in Pakistan, provided the resident person is the original
allottee of the sukuks;(C) Investment in Unit of Exchange Traded Fund
in respect of cost of acquiring in the tax year, unit of exchange traded fund offered to public and
traded on stock exchange in Pakistan;
OR
(D) Life insurance premium
Any life insurance premium paid on a policy to a life insurance company registered by the
SECP under the Insurance Ordinance, 2000, provided the resident person is deriving
income chargeable to tax under the head “salary” or “income from business.”
Provided that where tax credit has been allowed under this clause and subsequently the
insurance policy is surrendered within two years of its acquisition, the tax credit allowed shall be
deemed to have been wrongly allowed and the Commissioner, notwithstanding anything
contained in this Ordinance, shall re-compute the tax payable by the taxpayer for the relevant
tax years and the provisions of this Ordinance, shall, so far as may, apply accordingly.
Tax credit is allowed which is lesser of
(a) total cost of acquiring the shares or sukuks or the total contribution or premium paid by
the person (Higher from three amounts as Ordinance is silent on this issue) or
(b) 20% of taxable income or