CAF-2 · Chapter 11 · Question 8 of 15
If a taxpayer is eligible for multiple tax credits in a tax year, in what mandatory order must they be applied against the gross tax liability?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Foreign tax credit, then Tax credit on donations/investments, then Advance tax.
Explanation
Tax credits must be applied in the specific order: (i) Foreign tax credit, (ii) Tax credit on donations, investments, etc., and (iii) Quarterly advance tax and tax deducted/collected at source.
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