There is no restriction on quantity of Rs 40,000 denomination prize bonds for conversion; however, different options are available, stated State Bank of Pakistan (SBP) spokesperson in response to a query of Business Recorder According to the SBP, the national prize bonds of Rs 40,000 denomination will not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020. No further draws of Rs 40,000 denomination national prize bonds will be held. The cash payment for encashment of bonds is not allowed. However, bond holder(s) will have the following options to replace/encash these bonds: Conversion into Premium Prize Bonds (registered); replacement with Special Savings Certificate (SSC)/Defence Savings Certificate (DSC) and encashment at face value.
Ashfaq Tola Member Tax Reform Commission (TRC) told Business Recorder that the commission had proposed withdrawal of Rs 40,000 prize bonds in its last report of Tax Reform Implementation Committee (TRIC).
He said that Rs 40,000 prize bonds were used for whitening untaxed or black money. The agents engaged in business of prize bonds purchase such bonds from the winners of Rs 40,000 bonds at higher price. These bonds are sold in the market to the people who want to whiten illegal money.
Tola added that the move has also addressed the parking of black money through these bonds.
The TRIC report proposed that the numbering of prize bonds be digitalized and on the acquisition of a Prize bond the digital number should be given to avoid the issuance of scrip which will definitely narrow down the whitening scheme which has been in practice. This will also be a positive step in broadening the tax base.
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