ITO Section 61 | Charitable donations:

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  [, 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
• (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 subsection (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 

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 subsection (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.

[(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.]