Mohsin Siddiqui (Chief Reporter)
The Federal Board of Revenue (FBR) has recently established a new check post manned by Inland Revenue officers on the Battagram-Silk/Karakoram Road, which leads to tariff areas around Abbottabad. This measure, outlined in a notification issued on Thursday, is part of the FBR’s ongoing efforts to enforce tax compliance and monitor goods entering tariff regions from tax-exempt areas.
The newly established check post is positioned strategically to intercept goods traveling from non-tariff areas into tariff regions of Pakistan. This initiative comes under Section 40B of the Sales Tax Act and has been formalized through SRO.1193(I)/2024. The primary function of this check post is to ensure that goods coming from tax-exempt zones adhere to sales tax regulations and that appropriate duties and taxes are paid.
According to the FBR’s notification, the check post will be operated by a mobile squad of Inland Revenue officers. These officers will be responsible for inspecting and intercepting goods to verify whether the correct duties and taxes have been paid. The check post aims to close the gap in tax compliance that may arise from the movement of goods between exempt and taxable areas.
The goods transported from tax-exempt areas—defined under Article 246 of the Constitution as Azad Jammu and Kashmir, Gilgit-Baltistan, Border Sustenance Markets, and former Tribal Areas—must be accompanied by specific documents as outlined in the sales tax rules. These documents are essential for verifying the legitimacy of the goods and ensuring that they comply with tax regulations.
If the required documents are missing or if there are discrepancies in the provided paperwork, the FBR officers at the check post have the authority to seize both the goods and the vehicle transporting them. The seizure will be conducted with proper acknowledgment, and the owner of the goods and the vehicle will be issued a notice to explain why a penalty should not be imposed. This notice must be addressed within fifteen days of the seizure.
The FBR has emphasized that this measure is designed to curb tax evasion and ensure that all goods moving into tariff areas from tax-exempt zones are properly accounted for. By implementing this check post, the FBR aims to enhance its monitoring capabilities and enforce compliance more effectively.
The establishment of this check post follows a precedent set in 2022 when the FBR introduced 16 Inland Revenue check posts with mobile teams. These posts were also set up on routes originating from tax-exempt areas such as Azad Jammu and Kashmir, Gilgit-Baltistan, and erstwhile tribal areas. The goal of these check posts was similar: to scrutinize documents and ensure that goods entering taxable regions met all regulatory requirements.
The expansion of the FBR’s check post network reflects an ongoing commitment to improving tax administration and closing loopholes in the system. By increasing the number of monitoring points, the FBR aims to create a more robust framework for detecting and addressing tax evasion.
For businesses operating in or near the newly monitored routes, this development signifies the need for meticulous record-keeping and compliance with sales tax regulations. Companies transporting goods from tax-exempt areas must ensure that all required documentation is in order to avoid complications at the check post.
The increased scrutiny is expected to have a dual effect: it will enhance tax compliance and revenue collection while also potentially increasing operational costs for businesses that need to adapt to the new regulatory environment. Companies may need to invest in better documentation practices and ensure that their supply chains are fully compliant with tax laws to avoid penalties and disruptions.
