high value Prize Bonds Are Reportedly Used To keep away from Taxes in Pakistan

in keeping with a record issued by using the State financial institution of Pakistan (SBP), the usage of huge denomination prize bonds has increased dramatically for the purpose of preventing deduction of withholding tax on non-money banking transactions and to avoid declaring the undocumented profits.

small print of the file

Following the ideas in the document, investment in Rs. forty,000 and Rs. 25,000 has elevated by 60% and 80% respectively, when compared with the remaining monetary year, after the imposition of withholding tax.


The investment in Rs. forty,000 bonds has increased by using 15 billion compared to the earlier year, and it now stands at 40 billion rupees. investment in Rs. 25,000 and Rs. 15,000 bonds elevated through 13 billion and 10 billion respectively. while the investments in excessive valued bonds increased appreciably this 12 months, the adjustments in the amount of investments in decrease valued bonds weren’t a lot and are negligible.

The impact of accelerating Withholding Tax

the government imposed a withholding tax of 0.6% on all transactions in the years 2015/2016 for non-income tax return filers. the rate prior to that was once 0.4%.

The effect of increasing withholding tax was that the influx of prize bonds increased a great deal throughout the financial years of 2015/2016 as talked about past.

The SBP states that “Anecdotal evidence suggests that companies had been using these units to settle their transactions as an alternative of the use of banking gadgets like demand drafts, cheques and so on. that is the major this is because the increase used to be more reported for higher denomination bonds, together with Rs. forty,000 and Rs. 25,000 bonds”

They additional brought that due to this, larger investments in prize bonds have come on the expense of financial institution deposit growth.

high value Prize Bonds Are Reportedly Used To keep away from Taxes in Pakistan

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