FBR sets Rs4bn cap on tax-free imports for GB

December 31, 2025 (MLN): The Federal Board of Revenue (FBR) has introduced a Rs4bn annual cap for goods imported tax-free for exclusive consumption in Gilgit-Baltistan (GB).

The framework also includes a trader-wise quota system, along with digital controls and enforcement measures aimed at preventing misuse and protecting traders in the rest of Pakistan, as per press release issued.

The framework applies to imports routed through the Sost Dry Port and allows exemption from federal sales tax, income tax at import stage, and federal excise duty.

This shows Gilgit-Baltistan’s special constitutional status where key federal tax laws are not extended.

The exemption is strictly limited to goods meant solely for consumption within Gilgit-Baltistan.

To limit fiscal exposure and address concerns raised by traders and trade bodies across Pakistan, the federal government has fixed a hard annual ceiling of Rs4bn on the total value of such tax-exempt imports.

This cap applies collectively to all traders operating under the arrangement.

Under the operational mechanism, the Government of Gilgit-Baltistan will allocate trader-wise import quotas for tax-free goods.

These individual quotas, when combined, must remain within the Rs4bn annual limit.

Imports beyond the allocated quota will automatically fall outside the exemption regime.

Pakistan Customs, operating under FBR, has embedded a dedicated monitoring module within the WeBOC (Web-Based One Customs) system.

The system digitally registers each trader’s approved quota, debits it in real time as consignments are cleared, and blocks further tax-free imports once the quota is exhausted.

When the limit is reached, all applicable federal taxes are automatically charged in accordance with existing law, removing discretion at the clearance stage.

Since the Customs Act is extended to Gilgit-Baltistan, imports through Sost will continue to attract customs duty, regulatory duty, additional customs duty, and any other duties chargeable under the Act, regardless of the intended end use of the goods.

To prevent market distortion and revenue leakage, the GB government has formally committed to ensuring that tax-exempt goods are consumed strictly within the territory.

In parallel, Pakistan Customs has designed an enforcement mechanism to restrict the physical movement of these goods from GB to other parts of Pakistan, addressing long-standing concerns of diversion into mainland markets.

Strict penal action has been built into the regime for any violations.

In cases where tax-free goods are found to have been diverted outside GB, authorities may cancel the concerned trader’s quota, confiscate the goods, and impose additional penalties.

Repeated or serious violations could also trigger a reduction in the overall exemption limit, tightening the scheme further.

The measures are significant for traders, manufacturers, and retailers across Pakistan, as uncontrolled inflows of tax-exempt goods could undermine price competitiveness in adjoining regions.

By combining a fixed monetary ceiling, trader-level quotas, and automated customs controls, the system aims to facilitate trade and economic activity in Gilgit-Baltistan.

At the same time, enforcement commitments from both federal and GB authorities are intended to safeguard national revenue and ensure fair competition.

FBR maintains that the mechanism is targeted solely at supporting the people and economy of Gilgit-Baltistan, while ensuring transparency, fiscal discipline, and protection of legitimate business interests nationwide.

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