Interest On Securities Exempt From Tax

Wednesday, December 11, 2013

Interest On Securities Exempt From Tax

             Interest on securities is example from tax in the following cases;-
1)Securities held by or the property of any Provident Fund to the Provident fund Act 1925 applies;
2)Securities of the Provincial Government issued income tax free;
3)securities of the Federal Government issued free of income tax;
4)Securities held under Trust or other legal obligation wholly for religious or charitable purposes;
5)Securities held on behalf of an approved super  Fund;
6)Securities held on behalf of Knowledge Provident Fund;
7)Securities held by an Investment Company;
8)Securities received by an individual on securities of Federal or Provincial Government;
9) Approved  Debentures received by an  other than company . The aggregate under 8 and 9 shall be Rs. 5,000;
10)Securities received by a holder on selling cum-interest.

Permissible Deductions

         In Computing the income under the head "Interest on Securities",the following deductions are allowed;-

 1)Collection Charges-

          Any sum deducted from such interest by way of commission by a banker for  such interest on behalf of the course of collection charged by inadmissible.Again,any commission charged by any person other than the bank is inadmissible.

2)Interest On Borrowed Money-

        Interest payable on money borrowed by for the purpose of investment in securities is allowable as information . If such interest is payable outside Pakistan,between,can be allowed only if the income tax has been at sources.

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