Circulars/Notifications - Exchange Policy Department  
 F.E. Circular No. 60
June 24, 1992 

All Authorised Dealers
in Foreign Exchange,

Dear Sirs,

Tax on foreign exchange proceeds on account of export of goods

Through the Finance Act, 1992, an amendment has been made in the Income Tax Ordinance, 1979, whereby the existing withholding tax regime has been extended to include the class of exporters as well.

2. With effect from 1st July, 1992, all the authorized dealers in foreign exchange are required to deduct income tax at source from the foreign exchange proceeds realized on account of goods exported at any time by an exporter. The foreign exchange proceeds will comprise invoice value of goods exported, customs duty, freight and insurance and any other charges collected from the foreign buyers to the credit of the exporter’s bank account.

3. Withholding tax at the standard rate of 1% on the entire amount of the foreign exchange proceeds, converted into Pakistan rupee at the exchange rate prevalent at time of realization, is required to be collected.

4. The rate of withholding tax in the case of those exporters, who prove that the goods exported by them were eligible for reduction in income tax under normal law, will be as under:-


Type of Exporters

Reduced rate of with holding


Where the exporter was entitled to 50% reduction in tax on export of manufactured goods including refined/treated salt, barrettes, granite blocks, heat insulating bricks, and managesite refractories.



Where the exporter was entitled to 75% reduction in tax on export of value-added goods like leather & textile garments, engineering and electrical goods, sports goods,surgical goods and pharmaceuticals etc.


5. You are, therefore, advised to collect the aforesaid tax at source at the prescribed rates on FOB/C&F/CIF value realized on or after 1st July, 1992 and credited to the exporters’ accounts by converting the invoice value at the applicable rate. The tax so collected shall be deposited with the State Bank of Pakistan and where State Bank of Pakistan offices are not located, with the National Bank of Pakistan for credit to Federal Government Account under the Head "0011 – Taxes on income – Companies" and "0112 – Taxes on income of persons other than companies" by the close of business hours of the working day following the day on which such tax is collected. Bank Credit Advises/Proceeds Realization Certificates issued by the Authorized Dealers shall also indicate deduction of with-holding tax.

6. We may also add that failure to collect or deposit the tax may render the person responsible, personally liable to pay the tax besides exposing him to penal provisions and prosecution in a court of law. It is, therefore, emphasized that the instructions should be noted carefully for meticulous compliance.

7. The contents of this circular may please be brought to the notice of your constituents

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