Introduction
Withholding tax on prizes is collected under Section 156 of the Income Tax Ordinance, 2001.
Table of Contents
According to Section 156 (1) of the Income Tax Ordinance, 2001, “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 specified in Division VI of Part III of the First Schedule.”
Withholding Tax On Prizes-Rates
- Withholding tax rate on prize on prize bond or cross-word puzzle is 15% of the gross amount paid.
- Withholding tax rate on winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale, is 20% of the gross amount paid.
Withholding Tax On Prizes-Salient Features
- Tax will be collected by the person paying the prize.
- Where prize is not cash, the tax will be collected on fair market value of the prize.
- Withholding tax on prizes under Section 156 will be final.