Tax on Prize Bonds: What You Need to Know in 2025

In Pakistan, prize bonds are a popular saving and investment tool, available in six denominations: Rs. 100, Rs. 200, Rs. 750, Rs. 1,500, Rs. 25,000, and Rs. 40,000. These bonds are issued through the State Bank of Pakistan (SBP) and National Savings Centres and allow holders to participate in regular cash prize draws held throughout the year.

As bearer instruments, prize bonds ensure anonymity and are widely used by investors who seek both security and the thrill of potential winnings.

Many investors wonder, “Is tax deducted on prize money in Pakistan?” The answer is yes.

Prize bond draws are conducted publicly by a committee formed by the Central Directorate of National Savings (CDNS). A Hand Operated Draw Machine, usually operated by special children, is used during the ceremony to ensure transparency. Attendees from the public can also inspect the machine before the draw begins.

According to Section 156 of the Income Tax Ordinance, 2001, Withholding Tax (WHT) is deducted on prize bond winnings. The current tax deduction rates are:

• 15% for filers (those listed in the Active Taxpayers List)
• 30% for non-filers, regardless of the date the draw was held.

This tax policy applies to all prize bond draws conducted across the country and helps regulate and document the flow of prize money while encouraging taxpayers to remain compliant.