08-18-2011, 03:26 AM
you are absolutely right in your example. <blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by student_of_law</i>
<br /><blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Sayub</i>
<br />There are many products offered by different banks it is possible that you might not have subscribed for the one. Iam maintaining that zakat is deducted, as i was involved in the ICFR exercise of a reputed bank there i learned this. Focussing on the point please clarify what is meant by sec 60(2) and practicality of sec 40(2).[quote]<i>Originally posted by student_of_law</i>
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I apologize for entering into discussion without gaining sufficient knowledge. You are right. According to Schedule of Zakat & Ushr Ordinance, 1980, Zakat is deductible on many transactions at the time of payment of return. I thank you for enriching my knowledge.
As far as practical application of s.40(2) is concerned, I am of the view that it will come into play where deduction at source is not a final tax. For example in the case of company u/s 151(3) or by virtue of Part IV of Second Schedule.
Where deduction is not a final tax , the taxpayer, shall show profit on debt as income from other sources and calculate his tax liability, by adding this income to other heads of income.
For example a company is given profit on debt amounting to Rs.100
Simultaneously, zakat is deducted amounting to Rs.15
Now the company will show its income from other sources as Rs.85
Suppose income from business of company is Rs.1000
Now total income of company is 1085
s.9 and S.60 (1) say that from total income Zakat is to be deducted to calculate taxable income. However, in the above case, according to s.60(2), Zakat will not be deducted from total income of Rs.1085, as the deduction thereof has already been made from income from other sources (i.e. Profit on debt.).
I think the net effect will remain the same.
This is my understanding of the provision. It may need certain Correction.
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<br /><blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Sayub</i>
<br />There are many products offered by different banks it is possible that you might not have subscribed for the one. Iam maintaining that zakat is deducted, as i was involved in the ICFR exercise of a reputed bank there i learned this. Focussing on the point please clarify what is meant by sec 60(2) and practicality of sec 40(2).[quote]<i>Originally posted by student_of_law</i>
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I apologize for entering into discussion without gaining sufficient knowledge. You are right. According to Schedule of Zakat & Ushr Ordinance, 1980, Zakat is deductible on many transactions at the time of payment of return. I thank you for enriching my knowledge.
As far as practical application of s.40(2) is concerned, I am of the view that it will come into play where deduction at source is not a final tax. For example in the case of company u/s 151(3) or by virtue of Part IV of Second Schedule.
Where deduction is not a final tax , the taxpayer, shall show profit on debt as income from other sources and calculate his tax liability, by adding this income to other heads of income.
For example a company is given profit on debt amounting to Rs.100
Simultaneously, zakat is deducted amounting to Rs.15
Now the company will show its income from other sources as Rs.85
Suppose income from business of company is Rs.1000
Now total income of company is 1085
s.9 and S.60 (1) say that from total income Zakat is to be deducted to calculate taxable income. However, in the above case, according to s.60(2), Zakat will not be deducted from total income of Rs.1085, as the deduction thereof has already been made from income from other sources (i.e. Profit on debt.).
I think the net effect will remain the same.
This is my understanding of the provision. It may need certain Correction.
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