CAF-2 · Chapter 10 · Question 11 of 15
If Zakat is deducted at the time of the receipt of profit on debt, how is this Zakat treated when computing the taxpayer's taxable income?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) It is allowed as a direct deduction against the gross 'Income from Other Sources' before applying the tax rate.
Explanation
In the case of profit on debt, Zakat paid under the Zakat & Ushr Ordinance, 1980 is allowed as a deduction in computing the income under the head "Income from Other Sources" itself, rather than as a general deductible allowance against total income.
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