ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rate on prizes and winnings for tax year 2021.
The FBR issued withholding tax card 2020-2021 updated up to (June 30, 2020) after incorporating amendments made to Income Tax Ordinance, 2001 through Finance Act, 2020.
Under Section 156 of Income Tax Ordinance, 2001 every person making payment shall deduct / collect withholding tax from recipient of prize or winnings at the time the prize or winnings are actually paid.
The withholding tax rate is 15 percent of the gross amount on payment made for prize on quiz, bond and cross word. The tax rate shall be increased by 100 percent in case recipients of prize money is not on the Active Taxpayers List (ATL).
The tax rate shall be 20 percent of the gross amount on payment on winning from a raffle, lottery, prize on winning a quiz, prize, offered by companies for promotion of sales crossword or puzzles. The tax rate shall be increased by 100 percent in case the recipient of amount is not on the ATL.
The tax deducted/collected under this under shall be treated as final tax.
Under Section 156A, every person selling petroleum products to petrol pump operator shall collect withholding tax from petrol pump operators at the time the commission is actually paid.
The rate of withholding tax shall be 12 percent of the gross amount on payment to petrol pump operator on account of sale of petroleum products. The rate shall be increased by 100 percent in case person is not on the ATL.
The tax shall be treated as final tax under this head.