The Federal Board of Revenue has granted major tax relief to residents of Azad Jammu and Kashmir and Gilgit-Baltistan by allowing them to be included in the Active Taxpayers List, enabling them to avail themselves of filer tax rates on financial and business transactions in Pakistan.
Under a newly notified income tax amendment, the FBR will add taxpayers from Azad Jammu and Kashmir and Gilgit-Baltistan to its Active Taxpayers List if they already appear as active taxpayers with the Azad Jammu and Kashmir Central Board of Revenue or the Gilgit-Baltistan Council Board of Revenue.
The FBR has issued SRO.2423(I)/2025, proposing draft amendments to the Income Tax Rules 2002 to implement the decision.
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 person’s temporary or permanent address is in Azad Jammu and Kashmir or Gilgit-Baltistan.
If a person’s temporary and permanent addresses fall within Pakistan, the concerned Commissioner Inland Revenue will verify through IRIS that the individual does not have any employment or business in Pakistan.
The commissioner will carry out this verification after conducting an inquiry and obtaining an undertaking from the taxpayer.
At the same time, 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.
The FBR clarified that if the Commissioner Inland Revenue later determines that a person included in the Active Taxpayers List must file a return of income under section 114 of the Ordinance and the individual fails to comply with a notice issued under sub-section (4) of that section, the FBR will remove the person’s name from the Active Taxpayers List.
The decision aims to facilitate taxpayers from Azad Jammu and Kashmir and Gilgit-Baltistan by allowing them to conduct transactions in Pakistan at filer rates, while ensuring checks to prevent misuse of the facility.
