Government levied 5% Tax on Foreign Education Fees

To meet educational expenses Pakistani government has introduced 5% withholding tax on the transfer of funds in other countries. Tax has been introduced in Finance Bill in 2015.

all the remitters and financial institutes like foreign exchange, banks etc,  who are sending foreign currency outside the country are needed to collect advance tax from remitters. This will be adjusted against the income of person who’s remitting the money.

This will apply on all educational expenses:

·         Lodging and boarding expenses

·         Tuition Fees

·         Distance learning payment to any institute of foreign country

·         All other foreign education expenses

For health sector and education abroad, the State bank of Pakistan has issued a notification for the simplified procedure of sending remittance.

According to the revised policy, the banks on the behalf of the students can remit foreign exchange up to $70,000 or equal per student per calendar for the educational purpose for the students wishing to study abroad.  And for meeting the living expenses, banks are allowed to release cash of worth $5,000 for the students who are living abroad as per criteria.

In the health sector, for the medical treatment of Pakistani students, banks are allowed to send $50,000 or equal to the hospitals based on recommendation from the hospitals or medical specialists from Pakistan

For identifying persons who are sending remittance in Pakistan, the government should have to amend Section 111(4) of Income Tax Ordinance because the Tax experts said that the relaxation given by SBP can be altered as black money or at 5% advance tax may be whitened.