Section 61 of Income Tax Ordinance, 2001 has allowed tax credit against amount paid as charitable donations.
Following is the text of Section 61 of the Income Tax Ordinance, 2001:
61. Charitable donations.— (1) A person shall be entitled to a tax credit in respect of any sum paid, or any property given by the person in the tax year 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 or run in Pakistan by Federal Government or a Provincial Government or a Local Government; or
(d) entities, organizations and funds mentioned in the Thirteenth Schedule to this Ordinance.
(A/B) x C
C is the lesser of —
(a) the total amount of the person’s donations referred to in sub-section (1) in the year, including the fair market value of any property given; or
(b) where the person is —
(i) an individual or association of persons, thirty per cent of the taxable income of the person for the year; or
(ii) a company, twenty per cent of the taxable income of the person for the year 2:
Provided that where any sum is paid or any property is given to an associate by a donor, clause (b) of component C shall be, in the case of—
(i) an individual or association of persons, fifteen percent of the taxable income of the person for the year; or
(ii) a company, ten percent of the taxable income of the person for the year.
(3) For the purposes of clause (a) of component C of the formula in sub-section (2), the fair market value of any property given shall be determined at the time it is given.
(4) A cash amount paid by a person as a donation shall be taken into account under clause (a) of component C1 of sub-section (2) only if it was paid by a crossed cheque drawn on a bank.
(5) The Board may make rules regulating the procedure of the grant of approval under sub-clause (c) of clause (36) of section 2 and any other matter connected with, or incidental to, the operation of this section.
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