FBR Grants Tax Filer Benefits to AJK and Gilgit-Baltistan Residents
The Federal Board of Revenue (FBR) has announced a major tax relief measure for residents of Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB). Under a newly notified amendment, eligible individuals from both regions will now be included in Pakistan’s Active Taxpayers List (ATL), allowing them to benefit from filer tax rates on financial and business transactions carried out in Pakistan.
The decision is being seen as a significant step towards easing financial dealings for AJK and GB residents while maintaining proper tax compliance mechanisms. It also aims to remove long-standing hurdles faced by people from these regions when conducting transactions in Pakistan.
Background of the Decision
Previously, residents of AJK and Gilgit-Baltistan faced difficulties in availing filer tax benefits in Pakistan, even if they were registered taxpayers in their respective regions. Due to technical and legal limitations, they were often treated as non-filers for transactions in Pakistan, resulting in higher withholding taxes.
To address this issue, the FBR has issued SRO.2423(I)/2025, proposing amendments to the Income Tax Rules, 2002. The amendment formally allows taxpayers from AJK and GB to be included in the Active Taxpayers List, subject to certain conditions and verification procedures.
Inclusion in the Active Taxpayers List
According to the notification, the FBR will include a person in the Active Taxpayers List under Section 181A of the Income Tax Ordinance if the individual:
- Is a resident of Azad Jammu and Kashmir or Gilgit-Baltistan, and
- Appears as an active taxpayer with the
- Azad Jammu and Kashmir Central Board of Revenue, or
- Gilgit-Baltistan Council Board of Revenue
Once included in the ATL, such individuals will be able to conduct transactions in Pakistan at filer tax rates, which are significantly lower than non-filer rates.
✅ Check Active Taxpayer status by SMS Type "ATL (space) 13 digits Computerized National Identity Card (CNIC)" and send to 9966.
🏢 Check Active Taxpayer status of AOP and Company by SMS through the following procedure: Type "ATL (space) 7 digits National Tax Number (NTN)" and send to 9966.
Address-Based Eligibility Criteria
The FBR has clarified that eligibility will be determined primarily on the basis of a person’s temporary or permanent address.
- If a person’s temporary or permanent address is in AJK or Gilgit-Baltistan, they will qualify for inclusion in the ATL.
- However, if both the temporary and permanent addresses fall within Pakistan, additional verification will be required.
This distinction has been introduced to ensure that only genuine residents of AJK and GB benefit from the new policy.
Verification by Commissioner Inland Revenue
In cases where an individual’s addresses are listed within Pakistan, the Commissioner Inland Revenue will conduct a verification process through the IRIS system.
The commissioner will verify that the individual:
- Does not have employment in Pakistan, and
- Does not operate a business in Pakistan
This verification will be carried out after:
- Conducting a formal inquiry, and
- Obtaining an undertaking from the taxpayer confirming the accuracy of their information
The purpose of this step is to prevent misuse of filer benefits by individuals who should otherwise be filing tax returns in Pakistan.
Role of AJK and Gilgit-Baltistan Tax Authorities
Alongside the FBR’s verification, the regional tax authorities will also play a key role.
The AJK Central Board of Revenue or the Gilgit-Baltistan Council Board of Revenue will verify, through IRIS, whether the individual:
- Has employment in their respective region, or
- Is engaged in a sole proprietorship or business activity there
This dual verification mechanism ensures coordination between federal and regional tax authorities and strengthens compliance.
Conditions for Removal from ATL
While the decision offers relief, the FBR has clearly stated that inclusion in the Active Taxpayers List is conditional.
If, at any stage, the Commissioner Inland Revenue determines that a person:
- Is required to file a return of income under Section 114 of the Income Tax Ordinance, and
- Fails to comply with a notice issued under sub-section (4) of that section
Then the FBR will remove the individual’s name from the Active Taxpayers List.
This provision ensures that the ATL is not used to bypass tax obligations under Pakistan’s income tax laws.
Benefits for AJK and GB Residents
The decision brings several practical benefits for residents of Azad Jammu and Kashmir and Gilgit-Baltistan.
Key benefits include:
- Ability to conduct banking transactions at filer tax rates
- Lower withholding tax on
- property transactions
- vehicle registration
- banking and financial dealings
- Easier business transactions with Pakistani entities
- Reduction in financial burden caused by non-filer taxes
For many residents, this change will significantly reduce the cost of doing business or managing finances in Pakistan.
Impact on Economic Activity
The move is expected to encourage greater economic interaction between Pakistan and the regions of AJK and Gilgit-Baltistan.
By removing tax-related barriers, the policy may:
- Improve cross-regional trade
- Encourage investment
- Promote formal documentation of economic activity
Experts believe that such measures can also help bring more people into the documented economy without imposing additional burdens.
Ensuring Transparency and Compliance
The FBR has emphasized that the relief does not mean relaxed oversight. Instead, it combines facilitation with strict checks.
Through the use of:
- IRIS-based verification
- Inter-departmental coordination
- Undertakings and inquiries
The FBR aims to ensure that only eligible individuals benefit from filer status while maintaining the integrity of the tax system.
Conclusion – FBR Grants Tax Filer Benefits to AJK and Gilgit-Baltistan
The FBR’s decision to grant tax filer benefits to residents of Azad Jammu and Kashmir and Gilgit-Baltistan marks an important policy shift. By allowing eligible individuals to be included in the Active Taxpayers List, the government has addressed a long-standing issue faced by taxpayers from these regions.
While the move offers meaningful relief through lower tax rates, it also includes strong verification and compliance measures to prevent misuse. Overall, the decision strikes a balance between facilitation and accountability and is expected to positively impact financial and business activity involving AJK and Gilgit-Baltistan residents.
