I really wonder what happened to Shahid777. Is he still trading Forex , and still making that much ? Because if he is then by now he must be a millionaire, and that too in $$$ considering it's been almost 4 years since he started this thread, lol. I would really love to hear from you pal.
Now, I have two legal references to share with you all, one regarding the taxation of foreign income and the other relating to the conversion of foreign currency i.e the way you'll receive your money here in Pakistan because after going through the thread I got the feeling that a general confusion prevails. For the record, trading fx is totally legal, like any other business, say regular money changing. The difference between the two is that a money changing business would require a proper licence, as someone previously pointed out, whereas trading fx only requires an online brokerage account, mostly verified. The confusion which people have, like many others who have other sources of foreign income, is about transferring the money earned to their local bank.
Firstly, Chapter VIII, Anti-Avoidance, Section 111 (4) of the Income Tax Ordinance 2001 (Amended up to 30th June 2014) clearly states that 'Foreign exchange Remitted from outside Pakistan through normal banking channels' cannot be included in the person‘s income chargeable to tax under head ― Income from 'Other Sources'. The entire text of section 111 is as follows:
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Unexplained income or assets. — (1) Where —
(a) any amount is credited in a person‘s books of account;
(b) a person has made any investment or is the owner of any money or valuable article; a person has incurred any expenditure; or any person has concealed income or furnished inaccurate particulars of income including — (i) the suppression of any production, sales or any amount chargeable to tax; or (ii) the suppression of any item of receipt liable to tax in whole or in part,]
and the person offers no explanation about the nature and source of the amount credited or the investment, money, valuable article, or funds from which the expenditure was made [suppression of any production, sales, any amount chargeable to tax and of any item of receipt liable to tax] or the explanation offered by the person is not, in the Commissioner‘s opinion, satisfactory, the amount credited, value of the investment, money, value of the article, or amount of expenditure [suppressed amount of production, sales or any amount chargeable to tax or of any item of receipt liable to tax] shall be included in the person‘s income chargeable to tax under head ―Income from [Other Sources‖] to the extent it is not adequately explained [:]
[Provided that where a taxpayer explains the nature and source of the amount credited or the investment made, money or valuable article owned or funds from which the expenditure was made, by way of agricultural income, such explanation shall be accepted to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law.]
(2) The amount referred to in sub-section (1) shall be included in the person‘s income chargeable to tax in the tax year to which such amount relates.
(3) Where the declared cost of any investment or valuable article or the declared amount of expenditure of a person is less than reasonable cost of the investment or the valuable article, or the reasonable amount of the expenditure, the Commissioner may, having regard to all the circumstances, include the difference in the person‘s income chargeable to tax under the head ―Income from Other Sources‖ in the tax year 1[to which the investment, valuable article or the expenditure relates.
[(4) Sub-section (1) does not apply, —
(a) to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.
(5) The [Board] may make rules under section [237] for the purposes of this section.
Secondly I would like to quote #15: Foreign Exchange received by Residents in Pakistan CHAPTER VI (Private Foreign Currency Accounts) of the Foreign Exchange Regulation Manual which states that:
'Payments in foreign exchange received by an Authorized Dealer on behalf of a resident in Pakistan must not be retained in foreign exchange but must be converted into Rupees unless the State Bank has given general or special permission to the beneficiary to retain the foreign exchange received by him.'
I hope this shuts the legality issue for good. Happy trading fellows ! 
