KARACHI: The Federal Board of Revenue (FBR) has updated withholding tax rates on payment of prize bonds and winnings of lottery or promotion of sales from the gross amount paid to filers and non-filers of income tax returns during fiscal year 2016-17.
Section 156 of Income Tax Ordinance, 2001 related to prizes and winnings.
Sub-section (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 of 15 percent from filers of income tax returns and 20 percent from non-filers of income tax returns.
The rate of tax to be deducted under section 156 on winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale, shall be 20 percent of the gross amount paid.
Sub-section (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.
Meanwhile, the Board has also updated withholding tax rates on payment of commission made by petroleum company to a petrol pump operator at the different rates specified for filers and non-filers of income tax returns during fiscal year 2016-17. Section 156A of Income Tax Ordinance, 2001 related to petroleum products.
Sub-section (1) every person selling petroleum products to a petrol pump operator shall deduct tax from the amount of commission or discount allowed to the operator at the rate of 12 percent from filer of income tax return and 15 percent from non-filer of income tax return.
Sub-section (2) The tax deductible under sub-section (1) shall be a final tax on the income arising from the sale of petroleum products to which sub-section (1) applies.
Moreover, the country’s to revenue body also updated withholding tax rates on cash withdrawal from a bank by filers and non-filers of income tax returns during fiscal year 2016-17.
Section 231A of Income Tax Ordinance, 2001 related to cash withdrawal from a bank. (1) Every banking company shall deduct tax at 0.3 percent from filers and 0.6 percent from non-filers of income tax return, if the payment for cash withdrawal, or the sum total of the payments for cash withdrawal in a day, exceeds Rs50,000.
Through Finance Act, 2016 this explanation has been added to this section. “For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate withdrawals from all the bank accounts in a single day.”
Section 231AA of Income Tax Ordinance, 2001 related to advance tax on transactions in bank.
Sub-section (1) every banking company, company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of sale against cash of any instrument, including Demand Draft, Pay Order, CDR, STDR, SDR, RTC, or any other instrument of bearer nature or on receipt of cash on cancellation of any of these instruments.
Sub-section (2) every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of transfer of any sum against cash through online transfer, telegraphic transfer, mail transfer or any other mode of electronic transfer.
Sub-section (3) the advance tax under this section shall be collected at the rate 0.3 percent from filers and 0.6 percent from non-filers of income tax returns, where the sum total of payments for transactions mentioned in sub-section (1) or sub-section (2) as the case may be, exceed Rs25,000 in a day.
