Prize Bond Tax Rules in Pakistan – How Much Tax Is Deducted on Winnings?

Prize Bonds are considered one of the safest and most popular investment options in Pakistan. While the principal amount is completely secure, many investors are unsure about tax rules on prize bond winnings.

If you are holding prize bonds or planning to invest, it is important to understand how much tax is deducted on prize bond prizes, who is exempt, and how tax laws work in Pakistan.

This article explains Prize Bond Tax Rules in Pakistan in a clear and simple way.

Are Prize Bond Winnings Taxable in Pakistan?

Yes. Prize bond winnings are taxable under Pakistan’s income tax laws.

However, tax is not applied on holding prize bonds. Tax is deducted only if you win a prize. If you never win, you don’t pay any tax at all.

How Is Tax Deducted on Prize Bonds?

Prize bond tax is deducted under Section 156 of the Income Tax Ordinance, 2001.
The tax is deducted at source, which means:

• You receive the prize money after tax deduction

• You do not need to calculate or pay tax separately

• The bank or State Bank of Pakistan deducts tax before payment

Latest Prize Bond Tax Rates in Pakistan

The tax rate depends on whether you are a filer or non-filer with the Federal Board of Revenue (FBR).

Prize Bond Tax Rates (Current)

These rates apply to all prize bond denominations, including premium prize bonds.

Example: How Much Tax Is Deducted?

Example 1: Filer

• Prize amount: Rs. 100,000

• Tax rate: 15%

• Tax deducted: Rs. 15,000

• Amount received: Rs. 85,000

Example 2: Non-Filer

• Prize amount: Rs. 100,000

• Tax rate: 30%

• Tax deducted: Rs. 30,000

• Amount received: Rs. 70,000

Is Prize Bond Tax Final or Adjustable?

Yes, prize bond tax is considered a final tax.

This means:

• You cannot adjust it against other income

• You cannot claim a refund

• It does not increase your annual tax liability further

Once tax is deducted, the matter is closed.

Are Small Prize Bond Wins Also Taxed?

Yes. All prize bond winnings are taxable, regardless of the prize amount.

There is no minimum exemption limit.
Even small prizes are subject to tax deduction.

Is There Any Tax on Unsold or Unclaimed Prize Bonds?

No.

• No tax on buying prize bonds

• No tax on holding prize bonds

• No tax if you do not win

Tax applies only at the time of winning a prize.

Prize Bond Tax Rules for Joint Holders

Prize bonds are bearer instruments, not registered investments.
Therefore:

• Tax is deducted based on the claimant’s filer status

• Joint ownership does not reduce tax liability

Do Premium Prize Bonds Have Different Tax Rules?

No.
Premium prize bonds follow the same tax rules:

• 15% tax for filers

• 30% tax for non-filers

However, premium bonds offer:

• Higher prize amounts

• Periodic profit payments (subject to tax as well)

How to Reduce Prize Bond Tax Legally?

The only legal way to reduce prize bond tax is to:

Become an FBR Filer

• File your income tax return

• Register with FBR

• Maintain filer status

This can reduce your prize bond tax by half.

Is Prize Bond Tax Halal or Haram?

From an Islamic point of view:

• Tax is a government levy

• It does not change the nature of prize bond winnings

• Religious rulings depend on individual beliefs and scholarly opinions

Always consult a qualified Islamic scholar for personal guidance.

Prize Bond Tax vs Bank Saving Account Tax

Final Thoughts on Prize Bond Tax Rules

Prize bond tax rules in Pakistan are simple and transparent:

• Tax is deducted only if you win

• Filer status makes a big difference

• No hidden charges or annual taxes

For many investors, prize bonds remain attractive because there is no tax unless you win, unlike other saving instruments.

Frequently Asked Questions (FAQs)

Is prize bond tax refundable?

No, prize bond tax is final and non-refundable.

Do senior citizens get tax exemption on prize bonds?

No, prize bond tax applies equally to all individuals.

Can prize bond winnings be declared in tax returns?

Yes, but the tax is already final and settled.