ISLAMABAD (March 03 2003) : The Central Board of Revenue (CBR) is compiling a foolproof list of all multinational companies and renowned sponsors of television programmes/mega shows to impose 10 percent withholding tax on the prizes and awards given by them to the general public, sources told Business Recorder on Sunday.
The CBR has directed all the Regional Commissioners of Income Tax (RCITs) to slap a 10 percent withholding tax under the Income Tax Ordinance 2001 on the prizes/awards offered by the companies through television channels, including live coverage of mega shows.
The prizes/awards are liable to withholding tax at the rate of 10 percent of the gross amount won by the contestant.
Sources said that the said levy was already applicable as per section 156 of the Ordinance 2001, but the recent inflow of dozens of prizes, including brand new cars and cash prices, prompted the authorities to properly enforce the said income tax provision without delay and deduct the due amount at source.
The tax managers have estimated a good amount of revenue through monitoring of all such companies engaged in offering bumper prizes and attractive awards to the performers/contestants who participate in such programmes.
Income Tax Commissioners have been informed by the CBR that a number of companies have launched their marketing campaigns by offering various prizes/rewards.
These companies have also sponsored TV programmes on the special occasion like Eids and live coverage of mega events.
The CBR has further asked the RCITs to remain watchful of all these programmes and prepare a list of such companies, operating within their jurisdiction to monitor and charge withholding tax from above-mentioned companies.
According to section 156 (prizes and winnings) of the Income Tax Ordinance, 2001:
(1) Every person paying [prize on] a prize bond, or winnings from a raffle, lottery, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.
(2) Where a payment under sub-section (1) is not in cash, the person making the payment shall collect the tax due under that sub-section from the recipient of the payment.
(3) The tax deducted under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.
All such companies covered under the above-mentioned criteria laid down in section 156 of the Ordinance 2001 would be liable to a 10 per cent withholding tax.
The authorities would also monitor cable channels to search for these companies, sources added.