AJK and Gilgit Baltistan tax filer benefits

ISLAMABAD:

The Federal Board of Revenue has announced a major tax relief initiative for residents of Azad Jammu and Kashmir and Gilgit-Baltistan, allowing them to be included in Pakistan’s Active Taxpayers List (ATL) and benefit from filer tax rates on financial and business transactions across the country.

The decision, notified through SRO.2423(I)/2025, introduces draft amendments to the Income Tax Rules 2002 and aims to remove long-standing tax-related hurdles faced by taxpayers from these regions when conducting transactions in Pakistan.

Also Read: IMF Tax Pressure Rises as Pakistan Tax Revenue Shortfall

What the FBR Decision Means

Under the newly notified amendments, the FBR will automatically include individuals from AJK and Gilgit-Baltistan in the Active Taxpayers List if they already appear as active taxpayers with either the Azad Jammu and Kashmir Central Board of Revenue or the Gilgit-Baltistan Council Board of Revenue.

This inclusion will enable eligible individuals to enjoy filer tax rates, which are significantly lower than non-filer rates, on banking, property, and business transactions within Pakistan.

The move is expected to ease financial dealings for thousands of taxpayers who were previously treated as non-filers despite being registered with regional tax authorities.

Understanding the Active Taxpayers List (ATL)

The Active Taxpayers List, maintained under Section 181A of the Income Tax Ordinance, identifies individuals who have fulfilled their tax filing obligations. Being listed on the ATL allows taxpayers to benefit from reduced withholding tax rates on transactions such as:

• Bank withdrawals

• Property purchases and sales

• Vehicle registration

• Business and commercial payments

Non-filers, on the other hand, are subject to higher tax deductions, often discouraging formal economic participation.

Also Read: FBR Targets Doctors tax 73,000 High Earners Evade Taxes

Eligibility Criteria for AJK and GB Residents

According to the FBR notification, a person will be included in the ATL if their temporary or permanent address is located in Azad Jammu and Kashmir or Gilgit-Baltistan and they are already registered as an active taxpayer with the respective regional tax authority.

The measure ensures that individuals who are compliant with regional tax laws are not unfairly penalized when conducting transactions in Pakistan.

Verification Process Through IRIS

In cases where a person’s temporary and permanent addresses fall within Pakistan, the FBR has outlined a strict verification mechanism to prevent misuse of the facility.

The Commissioner Inland Revenue, having jurisdiction based on the individual’s CNIC address, will verify through the IRIS system that the person does not have any employment or business activity in Pakistan. This verification will be conducted after:

• Making a formal inquiry

• Obtaining a written undertaking from the taxpayer

Simultaneously, the relevant Commissioner of the Azad Jammu and Kashmir Central Board of Revenue or the Gilgit-Baltistan Council Board of Revenue will verify the existence of employment or sole business in their respective regions through IRIS.

Safeguards Against Misuse

The FBR has emphasized that inclusion in the Active Taxpayers List does not exempt individuals from future tax obligations under Pakistani law.

If the Commissioner Inland Revenue later determines that an individual included in the ATL is liable to file a return of income under Section 114 of the Income Tax Ordinance and the person fails to comply with a notice issued under sub-section (4) of that section, the FBR will remove the individual’s name from the Active Taxpayers List.

This safeguard ensures that the facility is used strictly for genuine taxpayers and not exploited to avoid tax liabilities.

Benefits for AJK and GB Taxpayers

The decision is expected to bring multiple benefits for taxpayers from Azad Jammu and Kashmir and Gilgit-Baltistan, including:

• Access to filer tax rates across Pakistan

• Reduced financial burden on banking and property transactions

• Improved ease of doing business

• Enhanced financial inclusion

• Recognition of regional tax compliance at the national level

By addressing long-standing concerns of double standards in tax treatment, the FBR aims to create a more equitable tax environment.

Read: FBR Tax Portal Glitches Trigger Nationwide Taxpayer Outrage

Impact on Documentation and Economy

Tax experts believe the move will encourage greater documentation of the economy by motivating individuals to remain compliant with tax regulations. It is also expected to strengthen coordination between federal and regional tax authorities through integrated verification via IRIS.

Moreover, the initiative aligns with broader tax reforms aimed at widening the tax base, improving transparency, and reducing reliance on indirect taxation.

Official Stance

Officials at the FBR have clarified that the objective of the amendment is facilitation, not exemption. While taxpayers from AJK and Gilgit-Baltistan will enjoy filer benefits, strict monitoring mechanisms will remain in place to ensure compliance with applicable laws.

The notification underscores the government’s intent to balance taxpayer relief with accountability.

The inclusion of Azad Jammu and Kashmir and Gilgit-Baltistan taxpayers in Pakistan’s Active Taxpayers List marks a significant step toward tax fairness and economic integration. By allowing eligible individuals to access filer tax rates while maintaining robust verification checks, the FBR has addressed a long-standing issue without compromising regulatory oversight.

The move is expected to ease transactions, promote compliance, and strengthen trust between taxpayers and the tax administration, contributing positively to Pakistan’s broader fiscal reform agenda.