Taxpayers filing returns in Azad Kashmir and Gilgit Baltistan to be treated as filers under the Income Tax Ordinance, 2001. Section 2(23A)
Taxpayers filing returns in Azad Kashmir and Gilgit: The Federal Board of Revenue has espoused the policy of increasing the cost of doing business for non-filers by prescribing higher rates of withholding tax for non-filers viz-a-viz filers under various withholding tax provisions.
Persons filing their Income Tax returns in Azad Jammu and Kashmir and Gilgit—Baltistan were being subjected to higher rates of withholding tax applicable to non-filers on various transactions such as cash withdrawal from banks, banking transactions, registration of motor vehicles, collection of motor vehicle tax etc in the territory of Pakistan because they did not fall within the ambit of definition of the term “filer” in terms of sub-section (23A) of section 2 of the Income Tax Ordinance, 2001 as their name(s) did not appear in the active taxpayers list issued by the Federal Board of Revenue periodically.
In order to facilitate persons filing their tax returns in AJ&K and Gilgit-Baltistan amendment in the definition of a “filer” under section 2(23A) of the Income Tax Ordinance, 2001 has been made through the Finance Act, 2018 whereby persons appearing on the Active Taxpayers List being maintained by Azad Jammu and Kashmir Council Board of Revenue and the Gilgit—Baltistan Council Board of Revenue, shall also be treated as filers under the Income Tax Ordinance,2001 therefore, such persons shall not be subjected to higher withholding taxes applicable to non-filers.
However, it would be pertinent to mention that persons conducting business/earning Pakistan-source income in the territory of Pakistan are obliged to file their income tax returns in Pakistan.