Karachi, January 3, 2024 – As the New Year unfolds, the Federal Board of Revenue (FBR) in Pakistan has provided clarity on the tax rates applicable to prize bond winnings for the year 2024.
The announcement brings important information for citizens participating in prize bond draws, outlining the tax obligations based on individual tax statuses.
According to the latest directives from the FBR, individuals listed on the Active Taxpayers List (ATL) will be subject to a 15 percent tax rate on their prize bond or word puzzle winnings during the tax year 2024. However, for those not included in the ATL, the tax rate will be higher, set at 30 percent.
In addition to prize bonds and word puzzles, the FBR has established tax rates for other forms of winnings. If a person on the ATL wins a raffle, lottery, quiz, or a prize through a sales promotion by a company, a tax rate of 20 percent will be levied on their winnings. On the other hand, individuals not on the ATL will face a higher tax rate of 40 percent for the same category of winnings.
This step by the FBR is seen as a measure to encourage individuals to become active taxpayers, as those on the ATL enjoy relatively lower tax rates on their prize earnings. The tax rates on winnings serve as an incentive for individuals to comply with their tax obligations and contribute to the national exchequer.
The varying tax rates based on ATL status underscore the government’s efforts to promote a culture of tax compliance and broaden the tax base. Individuals who ensure their presence on the ATL not only benefit from reduced tax rates on prize bond winnings but also contribute to the overall economic development of the country.
It’s important for citizens participating in prize bond draws to be aware of these tax rates, as failure to comply with tax obligations may result in penalties and legal consequences. The FBR’s initiative aligns with global practices, where taxation on prize winnings is a common regulatory requirement.
As the tax year progresses, individuals are urged to stay informed about any updates or changes in tax regulations. The FBR’s commitment to transparency and clear communication regarding tax rates is vital for fostering a tax-compliant culture in Pakistan. Participants in prize bond draws are encouraged to consult with tax professionals or visit the FBR’s official website for detailed information and guidance on tax implications related to their winnings.
