FBR Clarifies Safeguards on Tax Exemptions for Imports into Gilgit – Baltistan

Islamabad: The Federal Board of Revenue (FBR) has taken note of concerns expressed by traders, stakeholders, and trade bodies about the proposed procedure regarding non-levy of federal taxes on goods imported for exclusive consumption in Gilgit-Baltistan (GB). FBR hereby clarifies that a comprehensive and robust mechanism has been put in place to ensure that these tax-exempted goods are not misused and do not adversely affect the interests of traders and the business community in the rest of Pakistan.

Gilgit-Baltistan enjoys a special status, and certain federal tax laws including the Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Federal Excise Act, 2005 have not been extended to the territory. In view of this status and following representations from the GB Government and traders, the Federal Government agreed that imports made through the Sost Dry Port for consumption exclusively within GB shall not be charged under the Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Federal Excise Act, 2005 at the import stage. However, to ensure fiscal discipline and prevent misuse, a strict annual ceiling of Rs. 4 billion has been imposed on the goods imported for GB under this arrangement.

To operationalize this policy transparently and effectively, the following safeguards have been instituted:

Trader-Wise Quota Allocation: The Government of GB will determine trader-wise quotas for tax free goods meant for use in GB. These quotas, collectively, shall not exceed the annual cap of Rs. 4 billion.

Automated Control through Customs Systems: Pakistan Customs, under FBR, has developed a dedicated module in the WeBOC (Web-Based One Customs) system to automatically register, debit, and monitor these quotas in real time. Once a trader’s allocated quota is exhausted, the system will automatically block further tax-free imports, and applicable taxes will be collected in accordance with law.

Restriction on Movement of Goods: The Government of GB has formally committed to ensure that such goods are utilized strictly within the territory of GB. In addition, Pakistan Customs has devised an enforcement mechanism to prevent the movement of exempted goods from GB to other parts of the country.

Strict Penal Measures for Violations: As per the agreement with GB government and traders, any violation such as diversion of tax-free goods outside the territory will attract strict action. This includes cancellation of trader quotas, confiscation of goods, and reduction of the overall exemption limit, where necessary.

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Customs Duties to be collected: Since Customs Act 6 stands extended to GB, all the duties under said act (Customs Duties, Regulatory Duties, Additional Customs Duties etc.) will be collected on all imports through Customs Stations Sost, regardless of intended use.

FBR reiterates that these measures collectively provide a strong, technology driven, and enforceable framework to prevent leakage or misuse of tax-exempted goods. The business community and traders across Pakistan are assured that the exemption regime is carefully designed, closely monitored, and will not harm fair competition or legitimate trade interests in the rest of the country.

The mechanism is a targeted facilitation measure intended solely to serve the people and economy of Gilgit-Baltistan, fully consistent with its constitutional status, and with due safeguards to protect national revenue and the interests of traders nationwide.