In a significant update, the Federal Board of Revenue (FBR) has announced that taxpayers from Azad Jammu and Kashmir (AJ&K) and Gilgit-Baltistan will be included in its Active Taxpayers List (ATL). The decision comes as part of amendments to the Income Tax Rules through S.R.O. 1448(I)/2024, issued on September 18, 2024. This move is set to enhance tax compliance and promote accountability for residents of these regions, aligning them with the national tax system.
According to the newly proposed amendments, any individual who files a return with either the AJ&K Central Board of Revenue or the Gilgit-Baltistan Council Board of Revenue will have their name added to the FBR’s Active Taxpayers List, provided that their temporary or permanent address is located within these regions. This inclusion allows filers from AJ&K and Gilgit-Baltistan to benefit from being active taxpayers under the national framework.
The FBR also clarified the conditions under which an individual’s name can appear on the ATL. To be included, a person must file their income tax return for the latest tax year by the specified due date, or an extended due date granted either by the Commissioner or by the FBR itself. This is intended to ensure that individuals are in compliance with tax regulations while granting flexibility for those who may need additional time to file.
The term “latest tax year” was further defined by the FBR. It refers to the tax year that was most recently completed before the date of filing. This includes the year prior to the most recently completed year in cases where the deadline for the latter has not yet expired. This precise definition aims to provide clarity for filers, ensuring that they understand their obligations when filing returns.
For those individuals who miss the filing deadline for the latest tax year, the FBR provided an additional provision: they can still have their names included in the ATL if they pay a specified surcharge. This surcharge is outlined in the proviso to clause (a) of sub-section (1) of section 182A of the Income Tax Ordinance. This mechanism allows late filers to remain compliant while ensuring that timely filers are given priority.
Additionally, the FBR has addressed situations involving newly incorporated companies or associations of persons. If a company or association is formed after June 30, relevant to the latest tax year, and its tax return is not yet due, the entity’s name will still be included in the ATL. This ensures that new businesses are recognized as compliant from the outset, promoting a culture of tax responsibility within the corporate sector.
The FBR’s decision to include filers from AJ&K and Gilgit-Baltistan is a significant step towards broadening the country’s tax base and bringing more regions under the formal tax net. This move is expected to encourage greater participation in the national tax system, helping to generate more revenue while providing the benefits associated with being part of the ATL.
As the FBR continues to refine its policies, the inclusion of these regions in the ATL is also expected to contribute to enhanced regional development. Active taxpayer status brings advantages such as reduced withholding taxes on various financial transactions and eligibility for certain government contracts and tenders.
By extending the reach of its Active Taxpayers List, the FBR is reinforcing its commitment to fostering a more inclusive tax system, which is crucial for Pakistan’s economic development and long-term sustainability.