All
Authorised Dealers
in Foreign Exchange,
Dear
Sirs,
RELEASE
OF FOREIGN EXCHANGE FOR TRAVEL
ABROAD - LEVY OF 5% TAX
In
terms of sub-section (5B) of Section 50 of the Income Tax
Ordinance, 1979 introduced through Finance Bill, 1993, Authorized
Dealers are required to collect w.e.f. 1-7-1993 withholding
tax @ 5% at the time of release of foreign exchange for
travel abroad including business travel against 'T',
T-1,
T-2
forms and Blanket Permission but excluding travel for Hajj
and Umrah or on official tour. It will be the responsibility
of the Authorized Dealers releasing foreign exchange for
travel abroad to collect the tax from the travelers @ 5%
of the rupee equivalent of the foreign currency sold, as
calculated at the exchange rate prevalent at the time of
such release and deposit the same in the Government account
under the Head "0113500" maintained with State
Bank of Pakistan (or National Bank of Pakistan where State
Bank of Pakistan’s branch is not operating) on the
working day following the date of release of foreign exchange,
through challans. While prepare separate 'E-4'/'P-4'
schedules for releases subject to payment of tax and
those exempt from payment of tax and this fact shall be
prominently indicated at the top of the schedules. Photostat
copies of the paid challans alongwith statements (in duplicate)
of release of foreign exchange on Annexure
'A' covering cases subject to payment of tax and on
Annexure 'B' exempt from tax
should be attached to the relevant 'E-4'/'P-4'
schedules besides relevant 'T',
T-1,
T-2
forms and photo copy of Blanket Permission (where release
is against Blanket Permission) in the monthly foreign exchange
returns. In the case of release of Travel and Exchange Quota
for ‘Hajj’ and ‘Umrah’, the Authorized
Dealers will release foreign exchange only after the intending
traveler has obtained visa for the purpose, and photo copies
of pages 1, 2, 3 with inside title page and those pages
of the passport on which endorsement of Hajj Visa or Umrah
Visa and release of foreign exchange is made shall also
be furnished to the Control together with other prescribed
documents while submitting the monthly foreign exchange
returns.
2.
It should be noted that non-deposit or the delay in deposit
of the amounts of tax in the Government Account shall attract
penalty @ Rs.4.00 per Rs.10,000.00 (or part thereof) per
day.
3.
The persons from whom collection of advance tax under Section
50(5-B) is made would be entitled to claim its credit in
their annual income-tax returns for the relevant period.
Therefore, the Authorized Dealers shall issue proper receipts
to the travelers in respect of tax collected from them,
where demanded, for producing the same to the Income Tax
authorities.