Text of ITO Section 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 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
(c) any non-profit organization 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.

(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, twenty per cent 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 C 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.