Taxing foreign remittance

I know a migrant construction labourer who remits his hard earned money from Malaysia, through the banking channel to his mother, who lives in Bangladesh, to meet day-to-day family expenditures. The money is not taxable for him, but taxable for his mother.

That means the individual who remits the money enjoys the benefit of tax-free foreign remittance but the receiver does not enjoy the same. In our neighbouring country India, there is a provision that the first receipt of inward foreign remittance by relatives is not taxable. Rather income generated from this inward foreign remittance is taxable. The definition of “relatives” is set out in the Indian Income Tax Act 1961.

We expect that in the near future NBR will address these complexities and encourage migrant workers to remit money to Bangladesh. Moreover, the first receipt of inward foreign remittance to relatives should be made tax-free and a related provision should be incorporated in the Income Tax Ordinance 1984.

Md. Monzurul Karim, By email