Pakistan evaluating plan to remove cap on foreign remittances

ISLAMABAD: Government is reviewing a proposal to remove cap on inward remittances, allowing people to bring unlimited foreign exchange into the country through banking channels.

Under the proposed plan, the State Bank of Pakistan (SBP) would verify the source of the money. Authorities say this step could help address concerns about money laundering and unexplained income.

Government sources told local media that another option under review is increasing the current Rs5 million no questions asked limit for foreign remittances. Officials believe the limit has become outdated because of inflation and the falling value of the rupee.

Changes may require tax law amendment:

To implement the proposal, the government would need to amend Section 111(4) of the Income Tax Ordinance. At present, the federal board of revenue (FBR) cannot question the source of foreign remittances if they do not exceed Rs5 million in one tax year. The law also requires the money to come through official banking channels and be converted into rupees through a scheduled bank.

A few years ago, the government reduced the limit from Rs10 million to Rs5 million to stop people from converting untaxed money into legal assets without proper disclosure.

Govt is reviewing a proposal to allow people to bring unlimited dollars from abroad, subject to certification by the central bank about source of money, as an advisory firm estimated that #Pakistan can get $20 billion annually by relaxing the current limit https://t.co/W0VSV367Tx

— Asad Ali Toor (@AsadAToor) May 23, 2026

The company also proposed offering an Rs10 bonus for every US dollar sent through official banking channels. It believes this incentive could increase formal remittances by $4 billion to $5 billion each year.

Tola Associates said Pakistan already allows outward remittances of up to $100,000 per person every year. The firm added that reviewing these rules could also help save $1 billion to $2 billion in foreign exchange outflows.

IMF objections:

The previous Pakistan Democratic Movement (PDM) government had proposed replacing the Rs5 million limit with a $100,000 annual limit in the 2023 budget.

However, the proposal was later withdrawn after objections from the International Monetary Fund (IMF). At the current exchange rate, Rs5 million equals around $17,900, while $100,000 equals nearly Rs28 million.

The PBC said the current capital value tax on foreign assets is too high and discourages wealthy Pakistanis from keeping their money in the country. It also claimed that some Pakistanis are giving up citizenship or changing residency status because of tax policies.

In addition, the council demanded the removal of the super tax and a 9% surcharge on high salaries. Business leaders argued that heavy taxes are forcing skilled professionals and investors to move abroad or shift to the informal economy.

Experts believe the government is looking for ways to improve foreign exchange reserves and attract overseas funds without increasing pressure on the economy. If approved, the new measures could become part of the upcoming federal budget.