Govt May Allow Overseas Pakistanis to Remit Up to $100000 Without Declaring Source of Income

The federal government of Pakistan is contemplating a proposal to allow individuals to bring in up to $100,000 from abroad without the requirement to declare the source of income in the upcoming fiscal year.

This potential amendment is being discussed for Section 111 (4) of the Income Tax Ordinance, which pertains to unidentified sources of income. While some view it as a perpetual tax amnesty scheme, others see it as a measure to secure foreign currency and avoid default, according to Express Tribune.

Currently, authorities cannot inquire about the source of income if the remitted amount does not exceed Rs. 5 million per tax year. The proposed budget includes a suggestion to amend Section 111 (4) of the Income Tax Ordinance, replacing the Rs. 5 million threshold with $100,000 or approximately Rs. 29 million, which represents a significant increase.

If approved, expatriates and citizens would be permitted to bring in up to five times the previously allowed amount without having to disclose the source of income. While the Ministry of Finance has reportedly consulted with the central bank, no final decision has been made yet.

It is worth noting that Pakistan has assured the International Monetary Fund (IMF) that it will no longer grant tax amnesties. Therefore, any action to modify the Rs. 5 million limit without requiring the identification of income sources would be considered a form of amnesty.

Regardless of the interpretation, the government aims to generate billions of dollars through this measure, which would provide temporary relief until a new IMF program is agreed upon. Pakistan is still in the process of reinstating its IMF agreement, and the lender has expressed reservations about the budget estimates provided by the federal government. The IMF has also raised concerns about the sustainability of revenue projections for the upcoming fiscal year.

As talks for an immediate bailout have been hindered by the freeze on the program since 2022, securing additional funds, including the IMF loan, is crucial to address the crisis, alleviate supply shortages, and mitigate the risk of default before the elections later this year.