FBR Allows Tax-Free Imports From China to Gilgit-Baltistan via Sost Dry Port

The Federal Board of Revenue (FBR) has announced a major relief measure for the people and traders of Gilgit-Baltistan by allowing tax-free imports from China through the Customs Dry Port Sost. Under this new notification, selected Chinese goods imported for consumption within Gilgit-Baltistan will be exempted from sales tax, income tax, and federal excise duty with immediate effect.

This decision is being seen as a significant step toward supporting local trade, reducing prices of essential goods, and strengthening cross-border commerce under the China-Pakistan Economic Corridor (CPEC).

What Is the New FBR Notification About?

According to the official FBR notification, Chinese goods imported specifically for Gilgit-Baltistan will not be subject to:

• Sales Tax
• Income Tax
• Federal Excise Duty (FED)

However, the exemption applies only to specific goods listed by FBR under approved Pakistan Customs Tariff (PCT) codes and only when imports are routed through the Sost Dry Port.

This move is aimed at easing the cost of living in Gilgit-Baltistan and ensuring smooth trade with China.

Why Sost Dry Port Is Important for This Decision

The Customs Dry Port Sost is Pakistan’s main trade gateway with China through the Khunjerab Pass. It plays a critical role in:

• China–Pakistan trade
• CPEC logistics
• Import of consumer goods, machinery, and daily-use items

By granting tax exemptions at Sost, the government has made imports cheaper and faster for Gilgit-Baltistan residents who heavily depend on goods coming from China due to geographical limitations.

Who Will Benefit From Tax-Free Imports?

The tax exemption will directly benefit:

• Residents of Gilgit-Baltistan
• Local traders and wholesalers
• Small shopkeepers
• Transport and logistics businesses
• Border trade communities

Lower taxes mean lower prices, which is especially important in Gilgit-Baltistan where transportation costs are high.

Conditions for Getting Tax Exemption

Although the relief is substantial, FBR has set strict conditions to prevent misuse.

1. Online Authorization Is Mandatory

Each consignment must receive online, consignment-wise authorization through the Customs Computerized Clearance System (CCS).

This authorization will be issued by a duly notified authority of the Government of Gilgit-Baltistan.

2. First-Come, First-Served Basis

Tax exemptions will be granted within approved quota limits and on a first-come, first-served basis by the Collector of Customs.

3. Use Only Within Gilgit-Baltistan

Goods imported under this notification must be consumed only within Gilgit-Baltistan. Transporting these goods to other parts of Pakistan is strictly prohibited.

What Happens If the Quota Is Exceeded?

If goods are imported beyond the allocated quota, then:

• Sales tax will apply
• Income tax will be charged
• Federal excise duty will be levied

This ensures that only the approved quantity of goods enjoys tax-free status.

Strict Monitoring to Prevent Misuse

To prevent smuggling or misuse, FBR has empowered customs authorities with strict enforcement powers.

Role of the Collector of Customs

The Collector of Customs, Gilgit-Baltistan, can:

• Suspend tax exemption during protests or road blockades
• Cancel exemption in case of misdeclaration
• Initiate legal action under the Customs Act, 1969

Role of Chief Collector of Customs (Enforcement)

The Chief Collector of Customs (Enforcement) will ensure:

• Tax-free goods are not moved outside Gilgit-Baltistan
• Proper tracking and monitoring systems are in place

Special Procedure for Goods Going to Rest of Pakistan

FBR has also announced that a special tracking and clearance procedure will be introduced to clearly distinguish between:

• Goods imported for Gilgit-Baltistan consumption
• Goods imported via Sost for the rest of Pakistan

This will help customs officials prevent illegal diversion of tax-exempt goods.

Goods Covered Under PCT Codes

Only goods listed under specific PCT codes will be eligible for tax exemption. These codes will be:

• Reviewed periodically
• Adjusted if required

This gives FBR flexibility to update the list based on trade patterns and misuse risks.

Legal Framework Still Applies

Even with tax exemptions, all imports must comply with:

• Imports and Exports (Control) Act, 1950
• Import Policy Order
• Customs Act, 1969

This means restricted or banned items cannot be imported under this relief.

Why This Decision Matters for Gilgit-Baltistan

This move is important for several reasons:

1. Reduced Cost of Living

Tax-free imports mean cheaper goods, which is crucial for remote areas like Gilgit-Baltistan.

2. Boost to Local Economy

Lower import costs will encourage local businesses and improve trade activity.

3. Strengthening China-Pakistan Trade

The decision supports smoother trade under CPEC and enhances border trade relations.

4. Economic Inclusion

Gilgit-Baltistan has long demanded economic relief due to its unique geography. This decision addresses that concern.

Possible Challenges and Risks

Despite the benefits, challenges remain:

• Risk of smuggling to other provinces
• Misuse of quota system
• Monitoring during road closures or protests

This is why FBR has included strict enforcement clauses in the notification.

Public and Business Community Reaction

Initial reaction from traders and business groups has been positive. Many believe this step will:

• Improve supply chains
• Stabilize prices
• Encourage legal trade instead of informal channels

However, experts stress the need for transparent implementation.

What Traders Should Do Next

Traders planning to benefit should:

• Register with customs systems
• Coordinate with Gilgit-Baltistan authorities
• Import only approved goods
• Ensure consumption within the region

Failure to comply may lead to penalties or loss of exemption.

Conclusion

The FBR’s decision to allow tax-free imports from China to Gilgit-Baltistan via Sost Dry Port is a major economic relief initiative. By exempting sales tax, income tax, and federal excise duty, the government aims to reduce prices, boost trade, and support the people of Gilgit-Baltistan.

However, strict monitoring, quota limits, and enforcement mechanisms show that authorities are serious about preventing misuse. If implemented effectively, this policy could become a model for regional trade facilitation in Pakistan.

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