Many people confuse foreign income and remittances. Here’s a simple way to tell them apart:
- Remittance: This is money you earn and send to Pakistan from abroad while being a non-resident Pakistani (spending less than 183 days in the Pakistan in a tax year). This money is tax-free in Pakistan.
- Foreign Income: This is income earned by a person who is a resident Pakistani (spending 183 days or more in the country). If you live in Pakistan and earn money from a business, property, or services abroad, that is considered foreign income and is taxable in Pakistan.
The critical factor is your residency status, not just where the money is coming from.