New Withholding Tax Rates Announced for Prize Bonds and Profit on Debt
The government has implemented revised withholding tax rates on prize bond winnings and profits from loans or debt under the National Savings Schemes, with higher deductions for individuals who are not on the Federal Board of Revenue’s (FBR) Active Taxpayers List (ATL).
Tax Rates for Prize Bond Winners
According to the updated policy:
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ATL Filers will be subject to a 15% withholding tax on all prize bond winnings.
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Non-filers will face a 30% withholding tax, reflecting stricter enforcement aimed at encouraging tax compliance.
Tax on Profit from Debt (Section 151)
The same structure applies to interest earned from loans or debt instruments:
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Filers will be charged 15% withholding tax on the profit earned.
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Non-filers will pay a higher rate of 30% on such income.
Profit on Debt Exceeding Rs. 5 Million
For individuals earning over Rs. 5 million annually in profit from debt:
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The income will be taxed under normal income tax slabs.
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If total profit exceeds Rs. 5.6 million, the applicable tax rate rises to 45%.
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For profits below Rs. 5.6 million, the rate will be 40%.
These updated rates are part of the government’s broader efforts to enhance revenue collection and promote tax filing among citizens. Investors and account holders are encouraged to ensure their ATL status is up to date to benefit from lower tax deductions.
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