Federal Board of Revenue (FBR) has issued tax rates to be collected on winning of prize bonds and raffle or lottery during tax year 2023.
FBR in Pakistan collects income tax on prize bonds and prize winnings under Section 156 of the Income Tax Ordinance, 2001. The tax rates for prize bonds and lottery winnings may vary depending on the tax year and other factors. It’s important to stay updated on the latest tax laws and regulations to ensure compliance and avoid any penalties or legal consequences.
The tax rate on prize bonds and cross-word puzzles is 15 per cent of the gross amount paid according to Section 156 of the Income Tax Ordinance, 2001. However, if the winner of the prize bond or cross-word puzzle is not appearing on the Active Taxpayers List (ATL), the tax rate will increase by 100 per cent to 30 per cent. This is an incentive for individuals to become active taxpayers and be included in the ATL, as it can reduce their tax burden on prize winnings and other income sources.
The correct tax rate on winnings from a raffle, lottery, prize on winning a quiz, or prize offered by a company for promotion of sale, as per Section 156 of the Income Tax Ordinance, 2001, is 20 per cent of the gross amount paid. However, if the winner of the prize is not appearing on the Active Taxpayers List (ATL), the tax rate will increase to 40 per cent. It’s crucial to stay updated on the latest tax laws and regulations to ensure compliance and avoid any penalties or legal consequences.
The Income Tax Ordinance, 2001, requires every person paying a prize on a prize bond or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle to deduct tax from the gross amount paid. The tax rate to be applied for such winnings is specified in Division VI of Part III of the First Schedule of the ordinance. It’s essential to stay informed about the latest tax laws and regulations to ensure compliance and avoid any penalties or legal consequences.
According to Section 156(2) of the Income Tax Ordinance, 2001, if the prize referred to in sub-section (1) is not in cash, the person giving the prize shall collect tax on the fair market value of the prize. The tax deductible on such prizes or winnings shall be final tax on the income from prizes or winnings, and the recipient of the prize or winnings shall not be required to file a separate income tax return on this income. It’s essential to comply with these tax laws and regulations to avoid any penalties or legal consequences.