Circulars/Notifications - Exchange Policy Department  
 F.E. Circular No. 15
February 15, 1994 

All Authorized Dealers
In Foreign Exchange,

Dear Sirs,

RELEASE OF FOREIGN EXCHANGE FOR TRAVEL ABROAD – LEVY OF 5% TAX

Attention of Authorized Dealers is invited to F.E. Circular No.51 dated the 28th June 1993 and F.E Circular No.60  dated 26th July, 1993 respectively in terms of which 5% withholding tax is required to be collected at the time of release of foreign exchange for travel abroad excepting the releases for Hajj, Umra, Official tour and medical treatment of Government Officials.

2. There are reports that Authorized Dealers are not collecting 5% withholding tax on remittances made in the foreign exchange for undertaking studies abroad, business travel, medical treatment other that that falling under the exempted category on the plea that tax is to be collected at the time journey is being undertaken by the travelers for the above purposes. It has been clarified by the Central Board of Revenue that this understanding is not correct and that under Sub-Section (5B) of Section 50 of the Income Tax Ordinance, 1979, introduced through Finance Bill, 1993, Authorized Dealers are required to collect 5% withholding tax at the time of release of foreign exchange for travel abroad including business travel against 'T', T-1, T-2 forms, blanket permission & on remittances made from Pakistan on Form 'M' for education, business travel and medical treatment excepting the exempted category mentioned above. The above instructions should be noted for strict compliance.

3. The Authorized Dealers are also advised to make the following amendments in F.E. Circular No. 51 of 1993:-

  1. In the 24th Line of Para 1, please add the alphabet 'M' after 'T-2'.

  2. The above addition may also be made in column '9' of Annexure 'A' to the said F.E. Circular.

  3. In the 23rd line of Para 1, the words "E-3/P-3 and E-4/P-4 schedules" may be inserted in place of "E-3/P-3 schedule".

 

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