Permissible Deduction
The Following expenses can be claimed as deduction and the interest after being deducted,these deduction shall be taxed;-
1)Any interest paid by an to any banking company or other person on moneys borrowed by him for the purpose of investment in securities;and
2)Any commission paid to a banking company for realising interest on such securities on behalf ;
Interest On Securities Exempt From Tax.
Interest on securities is exempt 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 held under Trust or other legal obligation wholly for religious or charitable purposes;
4)Securities of the Federal Government issued free of income tax;
5)Securities held on behalf of Recognised Provident Fund;
6)Securities held on behalf of an approved super annution Fund;
7)Securities held by an Investment Company;
8)Securities received by an individual on securities of Federal or Provincial Government;
9) Apporved 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 realising such interest on behalf of the assessee.Any commission charged by a bank other than in the course of collection of the interest is 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 the assessee for the purpose of investment in securities is allowable as a dedution.If such interest is payable outside Pakistan,deduction can be allowed only if the income tax has been deducted at sources.
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