Tax credit for investment in shares and insurance (Section 62);

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This blog is in continuation to the series "Curtailing the Tax Liability (Part II) - Tax Credits".



Disclaimer: This blog will be updated over the period of time with practical examples, sample letters and relevant case laws and due to the volatility of tax statutes it is subject to unprecedented changes as and when required.





Tax credit for investment in shares and insurance (Section 62);




A resident person other than company shall be entitled to credit under this provision under following circumstance: 


- For cost of new shares (original alottee) offered to public on stock exchange of Pakistan; 

- For cost of sukuk of original alottee from stock exchange of Pakistan; 

- Any life insurance premium paid (not less than two years otherwise tax credit given shall be reversed) to insurance company registered with Security Exchange Commission of Pakistan; Only if the person is deriving income from Salary or Business 




Computation





                     Tax Credit = (A/B) X C 




A = Tax assessed before any tax credit 

B = Taxable Income for the year 

C = Lesser of following: 

- Cost of Shares/Sukuks/Premium 

- 20% of taxable income 

- Rs. 2,000,000/-



NOTE: In addition to above please click here to read Miscellaneous Provision of Tax Credit (Section 65);




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