PRC Certificate for Overseas Pakistanis Complete Remittance Guide

 

Introduction: The Overseas Pakistani Dilemma with Remittances

Every year, millions of overseas Pakistanis send money back home to support their families, buy property, or invest in Pakistan. While these remittances are not taxable, many face problems when filing tax returns. A common question is: Why isn’t my bank statement enough proof?

The answer is simple  the Federal Board of Revenue (FBR) requires stronger evidence that the money truly came from abroad. This is where the Proceeds Realization Certificate (PRC) becomes critical. Without it, overseas Pakistanis risk being taxed on money that is actually tax-free.

Understanding Remittances and FBR’s Requirements

Remittances are funds sent from abroad into Pakistan. By law, they are exempt from income tax. But the FBR is cautious. If someone declares a large amount as remittance but cannot prove it, the FBR may suspect it is undeclared local income.

To remove doubts, the FBR issued Circular No. 5 of 2022 which sets out four conditions:

1. The money must originate from outside Pakistan.

2. It should be converted into Pakistani Rupees (PKR) by a local bank.

3. The conversion rate applied must be the official foreign exchange rate.

4. Most importantly, the bank must issue a PRC certificate confirming the details.

📌 Example: Ali, living in Dubai, sends $5,000 to his family in Lahore. His family shows it in their tax return. If they only attach a bank statement, FBR may reject it. But if they attach a PRC from their bank, the FBR accepts it as tax-free remittance.

The Crucial Role of the PRC Certificate

A PRC (Proceeds Realization Certificate) is proof issued by a Pakistani bank confirming that the money came from abroad and was converted into PKR.

Why it’s essential:

• It’s the only document FBR accepts as legal proof.

• Bank statements alone often have vague entries like “TT Received” or “Cash Deposit,” which FBR may not trust.

• It protects you from unnecessary tax notices.

Typical PRC contains:

• PRC number and date.

• Sender’s name and country.

• Amount in foreign currency and converted PKR.

• Purpose of remittance (e.g., home remittance, freelancing, IT services).

📌 Example: Sara, a freelancer in Canada, transfers her earnings through her Pakistani account. Her bank issues a PRC stating “Purpose: Computer Services.” This way, FBR knows it’s foreign income and won’t charge tax.

Roshan Digital Account vs. Normal Banking Channels

• Roshan Digital Account (RDA): Designed for overseas Pakistanis only. Since local deposits are not allowed, no PRC is issued. The RDA bank statement itself is accepted as proof.

• Normal Bank Account: If you send money from abroad to a regular Pakistani bank account, a PRC is mandatory for tax exemption.

📌 Example: Ahmad uses his RDA to invest in Naya Pakistan Certificates. He doesn’t need a PRC  his statement is enough. But his brother sends money through a UAE bank to a local account in Multan; he must get a PRC.

How to Get and Verify a PRC

1. Request from your bank via email, call, or visiting the branch. Mention the period (e.g., July 2024 – June 2025).

2. Types of PRC:

   • Individual PRC (per transaction).

   • Annual Consolidated PRC (covers all remittances in a year).

3. Verify yourself: Compare PRC entries with your bank statement. Banks sometimes miss transactions or show wrong amounts.

📌 Example: Bilal requested a yearly PRC. When he compared it with his statement, two transactions were missing. If he hadn’t checked, FBR would have taxed those amounts.

What If the Bank Refuses?

If your bank delays or refuses to issue a PRC:

• Remind them it’s your legal right.

• If they still don’t cooperate, lodge a complaint with the State Bank of Pakistan (SBP) via email. SBP can instruct the bank to issue the certificate.

Risks of Not Having a PRC

• FBR may disallow your claim and tax your remittances.

• You could face penalties or audit notices.

• Even genuine remittances may be treated as taxable income.

📌 Example: Yasir’s father sent him £10,000 for house construction. Yasir didn’t obtain a PRC and only showed his bank statement. FBR disallowed it and taxed him heavily, causing stress and financial loss.

Conclusion: The PRC is Your Shield

For overseas Pakistanis, the PRC is more than just a piece of paper — it’s your shield against unnecessary taxation. Whether you are sending money for family support, freelancing income, or investments, always secure and verify your PRC.

Following FBR’s rules and obtaining the certificate in time ensures your hard-earned foreign income remains 100% tax-free and safe from disputes.