Taking measures in response to plea of an overseas citizen of Pakistan which is also the issue of millions of overseas Pakistanis, seeking benefits of certain provision of Income Tax Ordinance 2001 regarding regularization of remittances sent through money transfer companies, Federal Ombudsman office made it possible that Federal Board of Revenue will earn confidence of expats through recommending amendment in the law.
The applicant also claimed that other money transfer companies were not operating in Pakistan while the Income Tax Ordinance 2001 was promulgated, adding that currently expats used to send remittances through banking channel besides Money Gram and Western Union which operations have been regulated under State Bank of Pakistan.
Expressing his concerns, the applicant said that if the Federal Board of Revenue pay no heed to legalize the remittances sent through money transfer companies, there is strong possibility that remittances would be sent through illegal instrument ‘Hundi’ which definitely will cause a substantial amount of dent in the national kitty.
Revealing the plea to Governor State Bank of Pakistan and Chairman Federal Board of Revenue GCOP advocate Supreme Court Hafiz Ahsaan Khokhar conducted hearing of both the agencies’ representatives for resolving the issue.
Representative of the State Bank of Pakistan informed the GCOP advocate Supreme Court Hafiz Ahsaan Khokhar that matter pertains to classification of foreign remittances made through exchange companies as income under Income Tax Ordinance 2001 doesn’t fall under the regulatory domain of State Bank of Pakistan.
The Bank apprised the GCOP Hafiz Ahsaan Khokhar, “Under Section 111 (4) of Income Tax Ordinance 2001, Federal Board of Revenue accept ‘Proceed Realization Certificates’ (PRCs) issued by banks and banks issue PRCs for home remittances received through all overseas banks and money transfer companies including Money Gram and Western Union”.
“We are of the view that even foreign exchange proceeds of remittances disbursed by exchange companies are received by Pakistani banks, these remittances should also be recognized by FBR under Section 111(4) of Income Tax Ordinance – It would be appropriate to amend the Income Tax Ordinance to include PRC issued by Exchange Companies and Post Offices for the remittances”, stated the Central Bank.