How much tax is deducted on a Rs. 1,500,000 prize bond first prize?

On a Rs. 1,500,000 first prize (Rs. 100 denomination): a filer receives Rs. 1,200,000 (after 20% WHT of Rs. 300,000). A non-filer receives Rs. 1,125,000 (after 25% WHT of Rs. 375,000). The filer-non-filer difference is Rs. 75,000 on this single prize.

Is prize bond income tax the same as regular income tax in Pakistan?

Section 156 WHT deducted at encashment is an advance tax. Prize bond winnings must also be declared in the annual income tax return under 'Income from Other Sources.' The 20% or 25% already withheld is credited against total income tax liability. If total income tax owed is less than the WHT paid, a refund can be claimed.

Are Premium Prize Bonds taxed differently in Pakistan?

Premium Prize Bonds (registered bonds) were introduced as a documented alternative to bearer prize bonds. The WHT treatment under Section 156 applies similarly — 20% for filers, 25% for non-filers on winnings. However, because Premium Prize Bonds require CNIC registration, the encashment process automatically identifies filer status, making the correct WHT rate more reliably applied.

Where do I declare prize bond winnings in my FBR return?

Declare prize bond winnings in the 'Income from Other Sources' section of your annual FBR income tax return on IRIS. Enter the gross prize amount (before WHT). Then declare the Section 156 WHT deducted under 'Advance Taxes Paid.' IRIS credits the WHT against your total tax liability automatically.

Tax on Prize Bonds in Pakistan 2025-26 | Section 156

Q: What is the tax on prize bond winnings in Pakistan?

Under Section 156 of the Income Tax Ordinance 2001, withholding tax is deducted on prize bond winnings at the time of encashment. The rate is 20% for ATL filers and 25% for non-filers. This applies to all prize amounts regardless of size — there is no minimum threshold exemption for prize bond WHT.

Quick Answer Last updated: April 25, 2026

Prize Bond Tax — Section 156 at a Glance

Applies to All Prize Amounts

No minimum threshold. Every prize bond win — Rs. 1,000 or Rs. 75,000,000 — is subject to Section 156 WHT.

Filer Rate (ATL) 20%

Deducted at encashment. On Rs. 1,000,000 prize: filer receives Rs. 800,000.

Non-Filer Rate 25%

5 percentage points higher. On Rs. 1,000,000 prize: non-filer receives Rs. 750,000.

2026 Development — Mandatory Reporting: KPMG Pakistan's 2025 publication "The Move to Mandatory Reporting" highlights FBR's expanding focus on documented transactions. Prize bond encashments are increasingly tracked through CNIC-linked documentation requirements at SBP and prize bond agent offices. See KPMG Pakistan insights for context.

What Are Prize Bonds in Pakistan?

Prize bonds are bearer securities issued by the Government of Pakistan through the State Bank of Pakistan (SBP). They are sold in fixed denominations and participate in regular prize draws. Unlike savings accounts, prize bonds do not pay regular interest — instead, holders win prizes in periodic draws.

Regular (Bearer) Prize Bonds

Purchased without CNIC documentation. Anonymous bearer instrument. Increasingly restricted — FBR and SBP have pushed for documented alternatives.

Premium Prize Bonds (Registered)

Require CNIC registration at purchase. Documented investment. Prize winnings are directly traceable to the holder's CNIC for WHT application.

SBP policy shift: SBP has progressively phased out high-denomination bearer prize bonds to reduce undocumented wealth storage. Most current offerings are Premium (registered) bonds requiring CNIC documentation. Verify current available denominations at sbp.org.pk.

Prize Bond Denominations and WHT on Winnings

The following shows how Section 156 WHT applies to prize amounts across common prize bond denominations. Prize structures change periodically — verify current prizes at SBP's official site.

Prize Amount	Gross Prize	WHT (Filer 20%)	Net to Filer	WHT (Non-Filer 25%)	Net to Non-Filer	Filer Advantage
Small prize (Rs. 1,000 bond)	Rs. 1,000	Rs. 200	Rs. 800	Rs. 250	Rs. 750	Rs. 50
Third prize (Rs. 750 bond)	Rs. 18,500	Rs. 3,700	Rs. 14,800	Rs. 4,625	Rs. 13,875	Rs. 925
Second prize (Rs. 1,500 bond)	Rs. 500,000	Rs. 100,000	Rs. 400,000	Rs. 125,000	Rs. 375,000	Rs. 25,000
First prize (Rs. 100 bond)	Rs. 700,000	Rs. 140,000	Rs. 560,000	Rs. 175,000	Rs. 525,000	Rs. 35,000
First prize (Rs. 40,000 Premium)	Rs. 80,000,000	Rs. 16,000,000	Rs. 64,000,000	Rs. 20,000,000	Rs. 60,000,000	Rs. 4,000,000

Prize amounts and structures are set by SBP and change with each new bond series and quarterly draw schedule. Verify the exact prize tiers for your specific bond denomination at sbp.org.pk.

How Prize Bond Encashment and WHT Works

When you win a prize and present your bond for encashment, the withholding agent (SBP or authorized agent) deducts Section 156 WHT before paying out:

Check the quarterly prize bond draw results published by SBP.
If your bond number matches a prize, present it for encashment within the validity period (typically 6 years from draw date).
For registered (Premium) bonds — encashment through the registered bank or SBP. CNIC verification applies your ATL filer status automatically.
For bearer bonds — CNIC may be required for encashment above certain thresholds. Provide your CNIC to ensure your ATL filer status (20%) is applied rather than the non-filer rate (25%).
The encashment agent deducts Section 156 WHT at the applicable rate and pays out the net amount.
A WHT deduction certificate is issued — keep this for your annual return filing.

CNIC presentation matters at encashment: If you do not present your CNIC at encashment, the agent may apply the non-filer rate (25%) by default. Always bring your CNIC and, if possible, an ATL printout confirming filer status.

Declaring Prize Bond Winnings in Your FBR Return

Prize bond winnings are taxable income in Pakistan and must be declared in your annual return regardless of size. The Section 156 WHT deducted at encashment is an advance tax — credited against total income tax liability.

Collect the WHT deduction certificate from the prize bond encashment.
Log in to FBR IRIS and open your annual income tax return.
Declare the gross prize amount under "Income from Other Sources — Prize Bond Winnings."
Enter the Section 156 WHT amount under "Advance Taxes Paid — Section 156."
IRIS computes tax on total income and credits the 156 WHT already paid.
If WHT exceeds total tax owed, a refund can be claimed.

Large prizes and return scrutiny: A large prize bond win significantly increases declared income for that year and may push total income into a higher slab. However, the 20% WHT already paid on a large prize often covers or exceeds the incremental income tax — potentially resulting in a refund rather than extra payment.

Premium Prize Bonds vs Regular Prize Bonds — Tax Differences

Feature	Regular (Bearer) Prize Bond	Premium Prize Bond (Registered)
Purchase requirement	Cash — no CNIC needed (historically)	CNIC + bank account required
Tradability	Bearer — can be transferred freely	Registered — non-transferable
WHT rate (filer)	20% (if CNIC provided at encashment)	20% (automatic — CNIC linked)
WHT rate (non-filer)	25%	25% (if not on ATL)
FBR documentation	Less traceable historically	Fully documented — CNIC linked
Availability	Phased out for higher denominations	Current primary offering

Premium Prize Bonds are now the Government's preferred instrument. They offer comparable prize structures with better documentation — and because CNIC is mandatory, your ATL filer status is more reliably applied, reducing the risk of the wrong WHT rate being used.

Common Prize Bond Tax Mistakes in Pakistan

Not presenting CNIC at encashment — agent may apply the 25% non-filer rate by default.
Not declaring prize winnings in the annual return — prize income is taxable and must be reported.
Not collecting the WHT deduction certificate at encashment — needed for the advance tax credit in IRIS.
Missing the 6-year encashment window — unclaimed prize bonds expire.
Not checking whether the 20% WHT credit generates a refund — large prize WHT often exceeds total annual tax owed for many filers.
Storing prize bonds as undeclared wealth — SBP and FBR data sharing makes large bearer bond holdings increasingly visible.

Related Banking Tax Guides

Banking WHT OverviewAll banking WHT types and filer vs non-filer rates. Cash Withdrawal TaxSection 231A — 0.15% vs 0.6% above Rs. 50,000/day. Savings Account TaxSection 151 — 15% vs 30% on bank profit. Mobile Load TaxSection 236 — 15% advance tax on all top-ups. Filer vs Non-FilerFull financial impact of ATL status. How to File ReturnDeclare prize winnings and claim WHT credit.

Useful Tax Tools & Guides

CalculatorSalary Tax Calculator

Estimate income tax including prize winnings in total income.

Tax SlabsFBR Tax Slabs 2025-26

Slab rates for prize income added to total annual earnings.

NTNApply NTN Online

VerifyNTN Verification

Confirm filer status before presenting your bond.

FilingHow to File Return

Declare prize income and credit Section 156 WHT.

SavingsSavings Account Tax

Section 151 — how profit and prize income interact in returns.

Official Sources

Federal Board of RevenueSection 156, WHT schedules, and official notifications. FBR IRIS PortalFile return and declare prize bond winnings. State Bank of PakistanPrize bond draws, denominations, and encashment rules. KPMG — Mandatory ReportingFBR's expanding documentation and reporting requirements.

Frequently Asked Questions

What is the tax on prize bond winnings in Pakistan?

Section 156 WHT — 20% for ATL filers, 25% for non-filers — deducted at encashment on all prize amounts. No minimum threshold.

How much tax on a Rs. 1,500,000 prize bond first prize?

Filer: Rs. 300,000 WHT → net Rs. 1,200,000. Non-filer: Rs. 375,000 WHT → net Rs. 1,125,000. Filer advantage: Rs. 75,000 on this prize.

Do I declare prize bond winnings in my FBR return?

Yes — mandatory. Declare under "Income from Other Sources — Prize Bond Winnings" (gross amount) and credit Section 156 WHT under "Advance Taxes Paid." IRIS applies the credit automatically.

Are Premium Prize Bonds taxed differently?

Same Section 156 WHT applies — 20% filer / 25% non-filer. Premium bonds have mandatory CNIC registration, so your ATL status is more reliably applied at encashment than with bearer bonds.

What if the WHT on my prize exceeds my annual tax owed?

File your return declaring the prize and the WHT paid. If total tax owed is less than the 20% WHT already deducted, the excess is a refund claim through FBR IRIS.

How long do I have to encash a winning prize bond?

Prize bonds are generally valid for encashment for 6 years from the draw date. Check SBP's current rules at sbp.org.pk for specific denomination validity periods.

Disclaimer: Prize bond denominations, prize structures, and Section 156 rates are subject to SBP and Finance Act changes. Always verify current draw schedules, prize amounts, and WHT rates at sbp.org.pk and fbr.gov.pk before making decisions based on specific figures.

Summary

Prize bond winnings in Pakistan are subject to Section 156 WHT — 20% for ATL filers, 25% for non-filers — deducted at encashment on every prize amount. On a large first prize the filer-non-filer difference alone runs to tens of thousands of rupees.

Always present your CNIC at encashment to ensure the correct rate is applied. Declare the gross prize in your annual return, credit the WHT already paid, and potentially claim a refund if the 20% WHT exceeds your total annual tax liability.