ISLAMABAD: The limit of tax credit has been reduced by 50 percent on amount paid in cash or in kind to charitable donations, sources in Federal Board of Revenue (FBR) said.
The sources said that under the existing provisions of the last a person is entitled to tax credit on account of charitable donation paid in cash or in kind.
Currently such credit is allowed to the extent of lesser of: total amount donated in the year, including fair market value of any property given; or where the person:
(i) an individual or association of person, 30 percent of the taxable income of the person the year; or
(ii) a company, 20 percent of the taxable income of the person the year.
Deloitte Yousuf Adil, Chartered Accountants, said that the Finance Bill 2020 proposed to reduce the limit of credit by 50 percent in case of donations made to an associate as under:
(a) Total amount donated in the year, including fair market value of any property given; or
(b) Where the person:
(i) an individual or association of person, 15 percent of the taxable income of the person for the year; or
(ii) a company, 10 percent of the taxable income of the person for the year.
