ISLAMABAD: The Federal Board of Revenue (FBR) has collected around Rs11 billion as income tax on the amount paid from winning of prize bonds during fiscal year 2020/2021.
The collection of income tax grew by only one per cent during the fiscal year 2020/2021 as compared with Rs10.89 billion in the preceding fiscal year.
On the other hand, the income tax collection on winning from prizes, raffles, or lottery has increased by 97 per cent to Rs518 million during the fiscal year 2020/2021 as compared with Rs263.7 million in the preceding fiscal year.
The FBR collects income tax under Section 156 of the Income Tax Ordinance, 2001.
According to the FBR, every person paying prize on a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, the prize offered by companies for promotion of the sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.
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.
The tax-deductible under sub-section (1) or collected under sub-section (2) shall be a final tax on the income from prizes or winnings referred to in the said sub-sections.
The tax rate for Tax Year 2022 is:
(1) The rate of tax to be deducted under section 156 on a prize on prize bond or cross-word puzzle shall be 15 per cent of the gross amount paid.
(2) The rate of tax to be deducted under section 156 on winnings from a raffle, lottery, prize on winning a quiz, a prize offered by a company for promotion of the sale, shall be 20 per cent of the gross amount paid.
The total income tax collection under Section 156 of the Income Tax Ordinance, 2001 during the fiscal year 2020-2021 was Rs11.42 billion as compared with Rs11.16 billion in the preceding fiscal year.
