close
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
December 26, 2019

Tax revenue from prize money falls 23pc in November

Business

December 26, 2019

KARACHI: Collection of taxes on prizes and lottery winnings fell 23 percent in November, despite imposition of 100 percent additional tax on non-filers or those who filed their returns after due date.

According to statistics of the Regional Tax Office (RTO)-II Karachi, the income tax collection from the prize money fell 23 percent to Rs319 million in November, compared with Rs413.5 million during the same month of the last year.

Further, the collection of income tax under this head fell to Rs1.8 billion during the first five months of the current fiscal year, compared with Rs1.79 billion in the corresponding period of the last fiscal year.

Sources in the RTO – II Karachi attributed the decline to government’s decision to take action against undocumented money in saving schemes and higher interest rate on bank deposits.

From July 1, 2019, the FBR had imposed 100 percent additional tax on persons not appearing on the Active Taxpayers List (ATL).

Through the Finance Act, 2019, a Tenth Schedule was introduced to Income Tax Ordinance, 2001 under which 100 percent additional tax has been imposed on those persons who are either non-filer of annual returns or those who filed their returns after due date of filing the returns.

The sources said the government had initiated efforts to document investments made in the saving schemes and prize bonds. In the first phase, the government has decided to withdraw bearer bonds of Rs40,000 denomination from March 31, 2020.

It has also announced to withdraw the remaining bearer prize bonds, at a later stage. Besides, the government has also initiated efforts to document the entire investments made to saving schemes by conducting customers due diligence (CDD) and know your customer (KCY).

The FBR collects withholding tax on the payment of a prize on a prize bond or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for the promotion of sale, or crossword puzzle.

The sources said the slowdown in the economy also hampered the tax collection growth. The companies reduced the promotion schemes due to the prevailing economic conditions.

The higher rate of interest had also diverted investments to banking deposits, they said, adding that the State Bank of Pakistan (SBP) maintained the key policy rate at 13.25 percent.

According to applicable tax rates under the ordinance, the winning of prize bond attracts 15 percent income tax on active taxpayers. However, this rate is 30 percent for non-filers.

The tax rate on the promotion of sales or puzzles is 20 percent for active taxpayers and 40 percent for non-ATL persons. The tax is final liability of persons paying income tax on such winnings.