The federal government might allow people in the upcoming fiscal year to bring in up to $100,000 from abroad without declaring their source of income.
To enable this, the government is deliberating on amending Section 111 (4) of the Income Tax Ordinance, which deals with unidentified sources of income. While some see it as a perpetual tax amnesty scheme, others see it as a backup for arranging foreign currency and avoiding default, reported Express Tribune.
Presently, authorities cannot ask for a source of income if the remitted amount does not exceed Rs. 5 million per tax year. Through the new budget, there is a proposal to amend Section 111 (4) of the Income Tax Ordinance that would essentially replace Rs. 5 million with $100,000 or ~Rs. 29 million, which is a huge leap.
If approved, ex-pats/citizens would be allowed to bring in up to five times the previously approved amount without declaring their sources of income. The Ministry of Finance has reportedly taken the central bank into confidence, but no final decision has been taken yet.
Pertinently, Pakistan has assured the International Monetary Fund (IMF) that it won’t grant tax amnesties anymore. In this context, any action to change the Rs. 5 million limit without identifying the source of income will be considered a form of amnesty.
Whatever the case, the government is aiming to obtain billions of dollars as a result, which would provide relief until a new IMF program is signed. Pakistan is yet to restore the IMF agreement, and the lender has reportedly shared reservations about the budget estimates given by the federal government. The Fund has also questioned the sustainability of revenue projections for the coming fiscal year.
With the program frozen since 2022, the IMF’s external financing requirements and exchange-rate policy have largely impeded talks for an immediate bailout despite other and more austere measures to bring the economy back on track.
More cash and the IMF loan are critical in overcoming the crisis, alleviating supply shortages, and pulling the economy out of default risk before elections later this year.
Source: Pro Pakistani