CAF-2 · Chapter 4 · Question 3 of 15
Mr. X received a dividend of Rs. 100,000, which was subject to a Zakat deduction of Rs. 10,000 under the Zakat and Ushr Ordinance, 1980. How will this Zakat be treated for tax purposes?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) It will be deducted directly out of the dividend income under the head "Income from Other Sources".
Explanation
Where Zakat has been deducted out of the profit on debt or dividend, such Zakat shall not be deducted out of total income as a standard deductible allowance, but rather it shall be allowed as a deduction while computing the income from other sources.
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