Tax Increase on Prize Bonds and Profit on Savings in Pakistan: What You Need to Know
The government has announced a significant increase in withholding tax on prize bonds and profit on savings under the National Savings Scheme. This move directly affects both tax filers and non-filers, with a clear intention to promote tax compliance and boost national revenue.
Let’s break down what’s changing and what it means for you.
📌 What’s New?
According to a notification issued by the National Savings Scheme, the government has raised the withholding tax rates on two main financial instruments:
1. Prize Bonds
- Tax Filers: 15% withholding tax on prize winnings.
- Non-Filers: 30% withholding tax on prize winnings.
2. Profit on Debt (Savings/Deposits)
- Tax Filers: 15% withholding tax on profit earned.
- Non-Filers: 30% withholding tax on profit earned.
📊 Why This Matters
This change:
- Increases the cost of non-compliance with tax laws.
- Encourages more people to become tax return filers.
- Aims to improve documentation of the economy.
❓FAQs: Frequently Asked Questions
What is a Tax Filer?
tax filer is someone who regularly submits income tax returns to the Federal Board of Revenue (FBR).
What is Withholding Tax?
Withholding tax is a tax deducted at the source — meaning, it’s automatically deducted before you receive your prize money or profit.
How can I become a filer?
Register on the FBR website
Submit your annual income tax return
Get your name added to the Active Taxpayers List (ATL)
Will this apply to old prize bonds or savings certificates?
The increased rates apply to new winnings or profits, as per the latest notification. Past earnings are usually taxed according to the rates at the time they were earned.
Are these rates final?
These rates are subject to change through future government policies or finance bills.
✅ Summary in Bullet Points
- New tax rules implemented by the National Savings department.
- 15% tax for filers on prize bonds and profit.
- 30% tax for non-filers on both.
- The change encourages tax documentation and compliance.
- Non-filers will face double the tax rate.
🧾 Conclusion
The recent hike in tax rates on prize bonds and profits on debt sends a clear message: the government wants more transparency and accountability in the financial system. If you’re not already a filer, now is the best time to become one — not just to save money, but to contribute to a better-documented and stronger economy.
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