The Federal Board of Revenue (FBR) has revealed the withholding tax rate on prize bonds and winning for Tax Year 2019, as outlined in Section 156 of the Income Tax Ordinance, 2001.
The FBR’s issuance of the Withholding Tax Card for Tax Year 2019 provides a structured framework for the collection of taxes on various types of prizes, ensuring compliance with tax regulations.
The withholding of tax on prizes and winnings plays a pivotal role in the taxation system, ensuring that the government receives its due share of revenue from individuals and entities who receive prize money through various means, such as prize bonds, crossword puzzles, raffles, lotteries, and quizzes.
Under the provisions of the Withholding Tax Card for Tax Year 2019, the following rates of withholding tax shall be collected by every person making payments to recipients on account of winning a prize:
Payment Made for Prize on Quiz Bond and Crossword:
• Filer: 15 percent
• Non-filer: 25 percent
Payments on Winning from a Raffle, Lottery, Prize on Winning a Quiz, or Prize Offered by Companies for Promotion of Sale Crossword Puzzles:
• Withholding tax rate: 20 percent
It is important to note that the withholding tax collected under Section 156 of the Income Tax Ordinance, 2001, shall be considered as the final tax liability for the recipient of the prize payment. This means that the recipient is not required to pay any additional tax on these winnings, as the withholding tax serves as their complete tax obligation to the government.
These tax rates provide a clear and structured framework for tax collection on various types of prize winnings and help ensure that individuals and companies comply with their tax responsibilities. Whether it’s a prize bond, crossword puzzle, raffle, lottery, or quiz, the withholding tax rates are designed to create a fair and efficient mechanism for collecting revenue from such sources of income.
The distinction between filers and non-filers is an important one, as it emphasizes the government’s commitment to encouraging tax compliance. Filers, individuals or entities who have registered and filed their tax returns, benefit from a lower withholding tax rate, incentivizing them to fulfill their tax obligations.
The FBR’s move to specify these withholding tax rates for the tax year 2019 is a step towards greater transparency and accountability in the taxation system. It ensures that prize winners, whether they receive their awards through contests or company promotions, understand their tax obligations and that the government receives the revenue it is entitled to.
Taxpayers and recipients of prize money are encouraged to stay informed about any updates or revisions to withholding tax rates, as these rates may vary in subsequent tax years. They should also consult with tax professionals or refer to official FBR guidelines for accurate and up-to-date information on prize and winning withholding tax rates.
In conclusion, the FBR’s announcement of withholding tax rates on prizes and winnings for Tax Year 2019 provides a structured and fair framework for tax collection on various forms of prize money. These rates are crucial for individuals and companies involved in prize-winning activities and are designed to promote tax compliance and transparency in the taxation system. The FBR’s emphasis on differentiating between filers and non-filers underlines the government’s commitment to rewarding tax compliance. Recipients of prize money should be aware that the withholding tax collected represents their final tax liability, and they need not pay any additional taxes on their winnings.
I am filer and paid 15% tax approximately Rs.15,000/- on Prize bonds at SBP Counter against prize bonds but due to system failure tax certificate not collected. Now how can I get at it was associated with my CNIC but they are un-able facilitate customers.
Dear Naqvi ; non collection of Certificate is of no consequence as the tax paid against a prize bond is a final tax. It is just like not collecting ticket of Daewoo after having reached your destination.
Sir,
Where to show income from prize bond winnings in tax return and should we enter withholding tax without any certificate ?