Federal Board of Revenue (FBR) has notified rates of withholding tax on wining prize bonds and winnings raffle or lottery during 2022-2023.
The FBR issued the withholding tax card for tax year 2023 (July 01, 2022 to June 30, 2023) after amending the Income Tax Ordinance, 2001 through changes brought through Finance Act, 2022.
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Following is the text of Section 156 related to tax on prizes and winnings:
156. Prizes and winnings.—(1) Every person paying 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 shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.
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(2) Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.
(3) The tax deductible under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.
The rate of withholding tax on prizes and winnings under Section 156:
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— The rate of withholding tax for prize bond or cross word puzzle is 15 per cent for persons on Active Taxpayers List (ATL) and 30 per cent for person not on the ATL.
— The rate of withholding tax for raffle, lottery, quiz, prize and sale promotion by a company is 20 per cent for person on the ATL and 40 per cent for person not on the ATL.
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