He explained that the immunity from inquiry on foreign remittances through normal banking channel encashed in Pakistan rupee is restricted to Rs 10 million for a tax year.
Foreign income and assets statement (section 116A of ITO) would be filed by every resident individual having foreign income equal to or in excess of $10,000; or having foreign assets with a value of $100,000 or more shall furnish a 'foreign income and assets statement' giving following particulars:
Total assets and liabilities as on the last day of the tax year; foreign asset transferred during the year and consideration thereof; and foreign income and expenditure derived wholly and necessarily for the said income.
Every person who is required to file a 'foreign income and assets statement' is also required to file return of income under the section 114 of the ITO.
The time limitation for five years for the commissioner to issue notice to file return of income shall not be applicable if the commissioner is satisfied on the basis of reasons to be recorded in writing that a person who failed to furnish his return has foreign income or owns foreign assets.
In case of failure to file a foreign asset and income statement within due date, a penalty of 2 percent of foreign income or value of foreign asset shall be levied for each year of default, Tola added.
Another chartered accountant firm explained that the section 111(2) provides that unexplained income or assets etc shall be included in the person's income chargeable to tax in the tax year to which such amount relates. Now as per the Amendment Ordinance, 2018 amount representing investment, money, valuable article or expenditure situated or incurred in Pakistan or concealed income is Pakistan source then the same shall be included in the person's income chargeable to tax in the tax year to which such amount relates. However, if concealed income is foreign source or investment, money, valuable article or expenditure is situated or incurred outside Pakistan then such asset, income or expenditure shall be included in the person's income chargeable to tax in the tax year immediately preceding the tax year in which the same is discovered by the commissioner of income tax.
Previously, any amount of foreign exchange can be brought in Pakistan through banking channel and a certificate is produced to that effect from the bank. This amount is immune from any sort of inquiry and tax.
The Amendment Ordinance has placed a restriction of Rs 10 million in a tax year which can be remitted into Pakistan from abroad without any explanation on its nature and source.
The said move on one side may curb money laundering and on other may reduce the foreign remittances as now the tax authorities may proceeds to inquire the source of the amount, it added.