The federal government has enacted a fixed tax rate of up to 20 percent on winnings from prize bonds and lotteries as outlined in the Finance Bill 2024.
A fixed tax rate of 15 percent will now apply to winnings from prize bonds or crossword puzzles.
Moreover, the government has set a 20 percent tax rate on winnings from raffles, lotteries, and prizes won from promotional sales quizzes.
For investments in Sukuks, a 10 percent tax will be imposed on returns for individuals and Associations of Persons (AOPs) whose returns on such investments are less than Rs. 1 million. Additionally, a 25 percent fixed tax will apply to any company or entity that invests in Sukuks.
For returns exceeding Rs. 1 million, individual or AOP investors will pay a 12.5 percent tax, while companies or entities will continue to be taxed at the 25 percent rate.
These tax measures reflect the government’s efforts to enhance revenue generation from various financial activities, ensuring a more structured approach to taxation on winnings and investments. The introduction of these fixed tax rates aims to provide clarity and consistency in the taxation process, potentially affecting how individuals and entities approach investments and participation in prize-based activities.
