Tax credit allowed for investment in Sukuk, premium to life insurance

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ISLAMABAD: Federal Board of Revenue (FBR) has said that tax credit has been granted on investment made in Sukuks and on payment of premium to a life insurance company.
In its Circular No. 04 issued to explain major changes to Income Tax Ordinance, 2001 through Finance Act 2017, the FBR said that prior to the Finance Act 2017 a resident individual or an Association of Person (AOP) could avail tax credit in a tax year in respect of the expense incurred on acquiring new shares offered by a public company listed on a Pakistani stock exchange subject to the condition tax the resident individual or AOP is either the original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan.
The FBR said that the scope of such tax credit had been now extended through the Finance Act 2017 and the same shall now be available to a resident individual or AOP for cost of acquiring Sukuks offered by a public company listed and traded on a stock exchange in Pakistan subject to the condition that the resident individual / AOP is the original allottee of the Sukuks.
The FBR further said that the tax credit is also available to a resident individual / AOP deriving income under the head of ‘salary’ or ‘income from business’ who pays life insurance premium on a policy to a life insurance company registered by the SECP under the Insurance Ordinance, 2000.
“Appropriate amendment has been made through the Finance Act 2017 whereby the concerned commissioner has been empowered to recoup such tax credit and recomputed the tax liability of a taxpayer for the tax year/years in which such credit was allowed in case the insurance policy, in respect of which insurance premium was paid, is surrendered within two years of its acquisition,” the FBR added.