The government is reviewing a proposal to allow individuals to bring unlimited foreign currency into Pakistan through formal banking channels, as policymakers explore ways to strengthen foreign exchange reserves and improve the country’s external account position.

Officials are considering amendments to Section 111(4) of the Income Tax Ordinance, which currently bars the Federal Board of Revenue (FBR) from questioning foreign exchange remitted through banking channels up to Rs. 5 million in a tax year.

One proposal under discussion would remove this limit entirely, provided the State Bank of Pakistan verifies the legitimacy of both the sender and the recipient. Another option being examined is raising the existing threshold, which has significantly eroded in value due to inflation and currency depreciation. At current exchange rates, the present limit equals roughly $17,900.

The proposal has gained momentum ahead of the federal budget after tax advisory firm Tola Associates estimated that increasing the declaration threshold to $100,000 could potentially channel up to $20 billion in FATF-compliant overseas assets into Pakistan through official banking routes.

The firm has also suggested offering a Rs. 10 per dollar incentive on remittances sent through banks, arguing that such a measure could increase formal remittance inflows by an additional $4 billion to $5 billion annually.

Separately, the Pakistan Business Council has urged the government to reduce taxes on foreign assets, restore previous tax residency rules and gradually phase out the super tax. Business leaders argue that existing tax policies are discouraging investment and pushing wealthy Pakistanis to shift assets and residency abroad.

No final decision has been taken so far, but the proposals are under active review as part of wider budget discussions focused on attracting foreign exchange inflows and supporting economic growth.