Income Tax Ordinance, 2001 — Section 61: Charitable donations

61. Charitable donations.—1[(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 2[, 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 a3[Local Government]; or

(c)any non-profit organization 4[or any person eligible for tax credit under section 100C of this Ordinance; or

(d)entities, organizations and funds mentioned in the Thirteenth Schedule to this Ordinance.] 1 Sub-section (1) substituted by the Finance Act, 2003. The substituted sub-section (1) read as follows: “(1) A person shall be entitled to a tax credit for a tax year in respect of any amount paid, or property given by the person in the tax year as a donation to a non-profit organization.” 2 Inserted by the Finance Act, 2021. Earlier this insertion was made through Tax Laws (Second Amendment) Ordinance, 2021. 3 The words “local authority” substituted by the Finance Act, 2008. 4 Inserted by the Finance Act, 2021. Earlier this insertion was made through Tax Laws (Second Amendment) Ordinance, 2021. 119 Chapter III – Tax on Taxable Income

(2)The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: (A/B) x C where A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and 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, 1[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 C3[of]sub-section (2) only if it was paid by a crossed cheque drawn on a bank. 1 The word “fifteen” substituted by the Finance Act, 2009. 2 Full stop substituted by colon and thereafter new proviso added through Finance Act, 2020 dated 30th June, 2020 3 Inserted by the Finance Act, 2002. 120 Chapter III – Tax on Taxable Income 1[(5) The 2[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.] 3[ ] 4[ ] 1 Added by the Finance Act, 2003. 2 The words “Central Board of Revenue” substituted by the Finance Act, 2007. 3 Section 62 substituted by the Finance Act, 2011. The substituted section 62 read as follows: “62. Investment in shares.— (1) A person 3[other than a company] shall be entitled to a tax credit for a tax year in respect of the cost of acquiring in the year new shares offered to the public by a public company listed on a stock exchange in Pakistan where the person 3[other than a company] is the original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan.

(2)The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: (A/B) x C where – A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and C is the lesser of

(a)the total cost of acquiring the shares referred to in sub-section (1) in the year;

(b)ten per cent of the person’s 3[taxable] income for the year; or 3 3

(c)[ [three] hundred] thousand rupees.

(3)Where –

(a)a person has 3[been allowed] a tax credit under sub-section (1) in a tax year in respect of the purchase of a share; and

(b)the person has made a disposal of the share within twelve months of the date of acquisition, the amount of tax payable by the person for the tax year in which the shares were disposed of shall be increased by the amount of the credit allowed.” Chapter III – Tax on Taxable Income 1[ ] 2[ ]