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:-
-
In the 24th
Line of Para 1, please add the alphabet 'M' after 'T-2'.
-
The above
addition may also be made in column '9' of Annexure
'A' to the said F.E. Circular.
-
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".
