Tax on prize bond in pakistan

Tax on Prize Bond in Pakistan: Rates, Deductions, and Guidelines (2025 Update)

Introduction Prize bonds are a popular investment in Pakistan, offering a chance to win significant cash prizes through periodic draws. However, many investors overlook the taxation aspect of prize bond winnings. Understanding the tax on prize bonds in Pakistan is crucial to avoid unexpected deductions and ensure compliance with tax laws.

Current Tax Rate on Prize Bonds in Pakistan (2025)

As per the Federal Board of Revenue (FBR) Pakistan, the tax deduction on prize bonds varies based on the taxpayer’s status:

Filers (Active Taxpayers): 15% withholding tax is deducted from the prize amount.
Non-Filers (Non-Active Taxpayers): 30% withholding tax applies to non-filers, as per FBR regulations.

This means that if a filer wins Rs. 1,000,000, they will receive Rs. 850,000 after-tax deduction, whereas a non-filer will receive Rs. 700,000.

Is prize bond tax deducted automatically?

Yes, withholding tax on prize bonds is deducted automatically when the prize is claimed from the State Bank of Pakistan (SBP) or designated National Savings Centers. Winners do not need to file separate tax returns for this deduction; however, it must be reported in their annual tax filing.

Prize Bond Tax Calculator

How to Check Prize Bond Tax Deduction?

To verify prize bond tax deduction in Pakistan, winners can:

Request a deduction certificate from the National Savings Center or State Bank of Pakistan.
Before claiming their prize, they should check the FBR Active Taxpayer List (ATL) to ensure they are considered filers.
Visit the FBR online portal to confirm their tax status.

How to Reduce Tax on Prize Bonds?

To reduce prize bond tax deductions, follow these steps:

File your tax returns annually to be classified as a filer.
Register with the FBR and obtain an NTN (National Tax Number).
Regularly check the ATL list to confirm active taxpayer status.

Are prize bond winnings taxable in annual income?

Yes, prize bond winnings in Pakistan are taxable under the Income Tax Ordinance, 2001. Even though withholding tax is deducted at source, individuals must declare their prize winnings in their annual tax returns. However, no additional tax is applied beyond the withholding tax.

Prize Bond Tax Exemptions and Special Cases

Currently, there are no exemptions for prize bond winnings, except for specific government-endorsed welfare programs. If any exemptions or rebates apply, they will be notified by FBR Pakistan.

Frequently Asked Questions (FAQs)

1. What is the tax rate for filers and non-filers on prize bond winnings?

Filers: 15%
Non-Filers: 30%

2. Can I claim a refund on the deducted tax?

No, since it is a final tax deduction, refunds are not applicable.

3. Does the tax rate change for different prize bond amounts?

No, the tax rate is uniform across all denominations of prize bonds in Pakistan.

4. Where can I check if I am a tax filer?

Visit the FBR Active Taxpayer List (ATL) at www.fbr.gov.pk.

5. Is there any way to avoid tax on prize bond winnings?

No, tax is mandatory on all prize bond winnings in Pakistan.

Conclusion

Understanding the tax on prize bond winnings in Pakistan is essential for all investors. Whether you are a prize bond winner or a regular investor, ensuring tax compliance will help you maximize your earnings. Stay updated with FBR tax policies and always check your filer status to benefit from lower tax deductions.