Govt Increases Tax on Prize Bond Earnings, Profit on Debt for Both Filers, Non-Filers

Withholding tax rates on prize bond winnings and profits from debt/loan interest have been implemented on National Savings Schemes, with significantly higher rates for non-filers.

Under the revised policy, individuals listed on the Federal Board of Revenue’s Active Taxpayers List (ATL) will now pay 15 percent withholding tax on prize bond winnings.

In contrast, non-filers will be taxed at 30 percent, doubling the rate for those outside the tax net.

The same structure applies to profits on debt/loan interest (Section 151). Filers will face a 15 percent tax on any interest or profit earned from loans, while non-filers will again be subjected to a 30 percent withholding tax.

Profit on Debt Exceeding Rs. 5 Million

Where profit on debt exceeds Rs. 5 million for a Tax Year, it is taxed as normal income, i.e, normal business slab rates will be applicable, which will be 45 percent if profit on debt exceeds Rs. 5.6 million in a year, while 40 percent for profit below Rs. 5.6 million in a year.