The amount of the remittances transferred into bank accounts will be exempted from withholding tax with effect from July 1, 2020, claimed the Finance Division (FD).
Remittances during July-February fiscal year 2019-20 reached $ 15.1 billion. Due to this increasing trend in remittances, the remittances will exceed $22 billion by the end of fiscal year 2020, maintained FD while sharing the remittances data, measures to increase remittances, outlook and recommendations.
Any remittances transferred into bank accounts will be exempted from withholding tax with effect from July 1, 2020. Furthermore, a “National Remittance Loyalty Program” will be launched from September 1, 2020 with the collaboration from major commercial banks and government agencies through which various incentives will be given to remitters through mobile apps and cards.
Finance Division maintained that increased efforts by the Pakistan Remittance Initiative (PRI) helped attract higher remittances from the Pakistani diaspora through enhancing outreach, reimbursement of T.T. Charges Scheme (Free-send Model) and improvements in Payment System Infrastructure etc.
The reimbursement of T.T. charges scheme was revised in March 2020 accordingly. The amount of home remittance transactions between USD 100 and USD 200 (or equivalent in other currencies) to be reimbursed increased from SAR 10 to SAR 20.
The (SBP) has raised the monthly payment limits for information technology (IT) related freelance services from $5,000 to $25,000 per individual to enhance business-to-customer transactions through home remittance channels. The enhancement will facilitate freelancers to increase home remittances through formal banking channels in the country.
In order to further encourage the promotion of home remittances through formal channels, the Government of Pakistan has re-launched the performance-based scheme effective from January 01, 2020 in which, Rs. 1 per each incremental USD mobilized over 15 percent growth in remittances in the calendar year 2020.
It further maintained that ECC approved a technical supplementary grant of Rs. 9.6 billion during the current financial year to finance the above-mentioned initiatives. Visa fee reduction from the Kingdom of Saudi Arabia is likely to boost the inflows as well.
Export of Manpower
The export of manpower has been increased to 491,854 during July-February from 284,047 last year. The major recipients are Saudi Arabia, U.A.E and Oman. The present government has improved its diplomatic relations with the Gulf States which helped to restore the confidence of foreign employers on the Pakistani workforce.
According to the outlook, the remittances during July-February fiscal year 2020 reached $15.1 billion. Due to this increasing trend, the remittances will exceed $22 billion at the end of the fiscal year 2020.
Moreover, seasonal effect also play major role in boosting remittances. It is also expected that with the start of Ramadan and Eid, the flow of remittances will increase as workers generally send more money during festivals.
The division has recommended that the trends in global labor markets be thoroughly analyzed to determine the demand pattern of skill and then prospective emigrants should be trained for proficiency in such trades/ professions.