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CIRCULAR NO.15 OF 1999

(INCOME TAX)

SUBJECT: WITHHOLDING OF INCOME TAX UNDER SECTION 50(7C) ON PRIZE ON PRIZE BOND AND WINNINGS FROM RAFFLE, LOTTERY OR CROSSWORD PUZZLE.

Under sub-section (7C) of section 50 of the Income Tax Ordinance, 1979 tax is to be deducted/collected at source on prize on prize bonds and winnings from a raffle, lottery or crossword puzzle. Through an amendment in clause (b) of paragraph CC of Part-I of the First Schedule to the Ordinance, made vide Finance Act, 1999, the rate has been increased from 7.5% to 10%.

2. All the persons including State Bank of Pakistan, other Banks, institutions, companies etc who are making payments in cash or in any other form on account of the prizes/winnings mentioned above have to withhold income tax at the rate of 10% with effect from 1st July, 1999.

3. The persons responsible for deducting withholding tax under sub-section (7C) of Section 50 are obliged to file prescribed annual statement under Rule 201C of the Income Tax Rules, 1982, by the first day of September every year.

Second Secretary(Withholding Tax)