Pakistan is reviewing a major financial proposal aimed at increasing foreign currency inflows through banking channels. The plan is part of broader efforts to strengthen the country’s external account position.
Officials believe the proposal could bring significant economic benefits for Pakistan. It may also improve foreign exchange reserves over time.
The proposal under consideration allows individuals to bring unlimited foreign currency into Pakistan. The condition is that funds must be routed through formal banking channels.
Experts estimate that Pakistan could attract up to 20 billion US dollars annually if the plan is approved. This would provide strong support to the country’s financial stability.
At present, Section 111(4) of the Income Tax Ordinance limits scrutiny of foreign remittances. The Federal Board of Revenue cannot question amounts up to 5 million rupees in a tax year.
However, discussions are underway to revise this rule in Pakistan. One option is to remove the limit entirely. This would still require verification by the State Bank of Pakistan.
The State Bank of Pakistan would ensure that both sender and recipient are legitimate. This step is aimed at maintaining transparency and preventing misuse of the system.
Another proposal suggests increasing the current 5 million rupee threshold. This limit was introduced years ago and has lost value due to inflation.
At current exchange rates, the threshold equals around 17,900 US dollars. Policymakers believe it is no longer sufficient for modern financial needs in Pakistan.
A financial advisory report has recommended increasing the limit to 100,000 US dollars. This could encourage more overseas funds to enter Pakistan through legal channels.
The report estimates that such a change could unlock up to 20 billion dollars in compliant overseas assets. This would strengthen Pakistan’s financial inflows significantly.
Additionally, the report suggests offering incentives for remittances. A proposed bonus of 10 rupees per dollar sent through banks could boost inflows further.
Experts believe this incentive could add 4 to 5 billion dollars annually to Pakistan’s remittance inflows. It may also reduce reliance on informal money transfer systems.
Business groups have also submitted recommendations. The Pakistan Business Council has urged reforms in tax policies on foreign assets.
They also suggested revising tax residency rules and reducing super tax pressure. According to them, current policies are pushing investors away from Pakistan.
Officials say no final decision has been taken yet. However, discussions are ongoing as part of upcoming budget preparations.
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The government aims to improve financial stability in Pakistan. It also wants to attract more investment and strengthen foreign exchange reserves.
