FBR will now treat eligible AJK and Gilgit-Baltistan taxpayers as active filers in Pakistan, allowing them to access reduced tax rates on banking and business transactions.
FBR Extends Active Taxpayer Status to AJK and GB
The Federal Board of Revenue (FBR) has announced major tax relief for residents of Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB) by opening the door for them to be treated as active tax filers in Pakistan. Under a newly notified change to the income tax rules, eligible taxpayers from these regions will be able to appear in Pakistan’s Active Taxpayers List (ATL) and enjoy filer-level tax rates on a wide range of financial and business transactions.
This step addresses a long-standing concern for AJK and GB residents who are registered taxpayers in their own regional systems but were often treated as non-filers when dealing with banks, property transfers and other transactions in Pakistan. By recognising their tax status across jurisdictions, the FBR is aiming to remove this gap and make it easier for them to participate in the formal economy without facing punitive withholding taxes.
How AJK and GB Taxpayers Will Be Added to the ATL
To implement this decision, the FBR has issued SRO.2423(I)/2025, proposing draft amendments to the Income Tax Rules 2002. Under these rules, a person can be included in Pakistan’s Active Taxpayers List under section 181A of the Income Tax Ordinance if their permanent or temporary address is in AJK or GB and they are already listed as active taxpayers with either the AJK Central Board of Revenue or the Gilgit-Baltistan Council Board of Revenue.
In simple terms, this means that if you are a compliant taxpayer in AJK or GB, your status can now be mirrored in Pakistan’s system. The FBR will rely on data from the regional tax authorities to confirm your active status, allowing your name to appear on the ATL so that banks, property registries, companies and other institutions can treat you as a filer when applying tax rates and transaction codes.
Verification Process to Prevent Misuse
The notification also introduces checks and balances to make sure the new facility is not misused by people who actually live and work in Pakistan but try to claim AJK or GB status just to avoid filing returns. If a person’s temporary and permanent addresses are both within Pakistan, the relevant Commissioner Inland Revenue will first have to verify through the IRIS system that the individual does not have an employment or business presence inside Pakistan.
This verification will only be completed after an inquiry and after obtaining a formal undertaking from the taxpayer. At the same time, the concerned Commissioner of the AJK Central Board of Revenue or the GB Council Board of Revenue will confirm, again through IRIS, that the person does indeed have their employment or sole business in AJK or GB. Only when both sides are satisfied will the taxpayer be treated as an active filer in Pakistan based on their regional tax compliance.
Removal from ATL if Pakistan Tax Obligations Are Ignored
The FBR has also clarified that this cross-recognition of taxpayer status does not mean complete exemption from Pakistan’s income tax filing rules in all situations. If, at any point, the Commissioner Inland Revenue later determines that a person included in the Active Taxpayers List is required to file a return of income under section 114 of the Income Tax Ordinance, that person will be served a notice under sub-section (4) of the same section.
If the taxpayer then fails to respond or file the required return within the prescribed timelines, the FBR will remove their name from the Active Taxpayers List. This ensures that individuals who actually have taxable income or business activities in Pakistan are still bound by the country’s tax laws, even if they also appear in the regional tax systems of AJK or GB.
What the New Rules Mean for AJK and GB Residents
For genuine residents of Azad Jammu and Kashmir and Gilgit-Baltistan, the new rules are a significant step forward. Being recognised as active tax filers in Pakistan means they can now access filer-based tax rates on banking transactions, vehicle registration, property deals, dividends, profit on debt and other financial activities conducted within Pakistan. This can translate into real savings and reduce the frustration of being treated as non-filers despite paying taxes in their home regions.
At the same time, the verification mechanisms built into the system aim to protect the integrity of the Active Taxpayers List and discourage abuse. Overall, the decision reflects an effort to better integrate AJK and GB taxpayers into Pakistan’s financial system, while still maintaining clear rules on who must file returns and where. For residents of these areas, it is both a recognition of their tax contributions and an incentive to remain compliant with regional tax authorities so that they can continue to enjoy filer benefits across the country.
