Karachi, September 9, 2024 – The Federal Board of Revenue (FBR) has revised the withholding income tax rates on winnings from prize bonds for the tax year 2024-25.
This update was announced through the issuance of the updated withholding tax card, in line with Section 156 of the Income Tax Ordinance, 2001. The revised tax rates apply to both active taxpayers and non-active taxpayers and encompass various forms of winnings, including prize bonds, crosswords, lotteries, and promotional prizes.
According to the FBR, individuals who win prize bonds or crossword puzzles will be subject to different tax rates depending on their status in the Active Taxpayers List (ATL). For those included on the ATL, the tax rate has been set at 15%. However, for individuals not on the ATL, the withholding tax rate will be significantly higher, at 30%. This distinction between ATL and non-ATL taxpayers is in line with the FBR’s ongoing efforts to encourage tax compliance and widen the tax net.
The tax authority also announced a separate set of rates for winnings from raffles, lotteries, quizzes, and prizes awarded as part of sales promotions conducted by companies. For ATL individuals, the withholding tax on such winnings will be 20%, while non-ATL individuals will face a 40% withholding tax. This increase in the tax burden for non-ATL winners reflects the government’s continued focus on incentivizing individuals and companies to file their tax returns and be part of the active taxpayers’ registry.
These updated rates come as part of the broader fiscal strategy implemented by the FBR to ensure higher revenue collection from non-compliant taxpayers while providing some relief to compliant individuals. The distinction in tax rates between ATL and non-ATL individuals is designed to reward those who regularly file their income tax returns and comply with tax regulations.
FBR’s announcement follows its sustained campaign to encourage tax compliance and discourage non-filers from evading taxes. The higher withholding tax rates for non-ATL winners underscore the board’s push to ensure that non-compliant individuals bear a greater tax burden than those on the ATL.
These updates are expected to affect individuals who frequently invest in prize bonds or participate in lotteries, quizzes, and sales promotions. Taxpayers are encouraged to regularly check their status on the ATL to take advantage of the lower tax rates. As the tax year progresses, the FBR will continue monitoring compliance and issuing further updates as part of its ongoing efforts to improve tax collection and reduce tax evasion in Pakistan.
