The Inland Revenue Department of the Azad Jammu and Kashmir was established in 1948 as the Department of Irrigation and Revenue (Excise & Taxation Department). *Its financial and administrative control was initially under the independent government of the state*. At that time, various taxes and related regulations, modeled after the Punjab province system, were applied in the state in 1958. The enforcement of these laws and the collection of revenues were assigned to the Department of Irrigation and Revenue. The collected revenues were deposited into Government Account No. 101 at designated branches of the National Bank of Pakistan, which were operating within the state.
Administrative Reforms:
Subsequently, under Government Notification No. 17842-60/S&GAD/1979, dated August 23, 1979, the management of the Excise & Taxation and Audit Accounts Departments was transferred to the Azad Jammu & Kashmir Council, headquartered in Islamabad. During this period, the Income Tax Ordinance of 1979 was implemented in the state, and the portfolio for income tax collection was assigned to the Excise & Taxation Department. Later, it was renamed as the ‘Income Tax, Central Excise & Sales Tax / Excise & Taxation Department’, and excise check posts were established across various districts to facilitate revenue collection. While provincial taxes were fully transferred to the state, 80% of income tax revenues were allocated to the Azad Kashmir government, with the remaining 20% reserved for federal/council-level expenses. In 2011, the department was officially named the ‘Inland Revenue Department’, which continues to operate under this designation.
Recent Developments:
Following the 13th Constitutional Amendment in May/June 2018 and the associated administrative notifications, the financial and administrative control of the Inland Revenue Department was returned from the Azad Jammu & Kashmir Council to the Azad Government of the State of Jammu and Kashmir. Under this change, all collected revenues—including income tax, sales tax, federal excise duty, and other levies—are deposited directly into the state treasury. In 2020, the Inland Revenue Secretariat and the Azad Jammu & Kashmir Central Board of Revenue were established to oversee the implementation of tax laws and revenue collection across the state.
Zonal Structure:
In 2023, for improved administrative efficiency, the Inland Revenue Department was divided into two zones: the North Zone (covering the districts of Muzaffarabad and Poonch divisions) and the South Zone (covering the Mirpur division). Each zone is assigned separate annual tax targets by the government.
Performance Analysis:
Before analyzing current trends, it is essential to review departmental performance prior to the 13th Amendment and under the Azad Government of Jammu & Kashmir. The last ten years of assigned tax targets and actual revenue collection provide a quantitative basis for evaluating efficiency and fiscal management.
Revenue Collection – A Historical Milestone:
The above data confirms that before the 13th Amendment, tax revenue was PKR 20 billion. In the last fiscal year (2024-25), the department successfully collected over PKR 71 billion, marking a historic milestone in departmental and state history. A substantial increase is expected during the current fiscal year (2025-26). The hundreds-fold increase in revenue over the last two years is clear evidence of the department’s diligent efforts. Below is a review of some key achievements of the Department of Inland Revenue, both overall and for the South Zone specifically.
2. Implementation of the Latest AJK POS Invoicing System.
Early Launch: The AJK POS Invoicing System, initially planned for August/September 2025, was successfully launched nine months ahead of schedule in February 2025. The system was inaugurated by the Prime Minister of Azad Jammu & Kashmir in Mirpur.
Integration: Over 70 national brands, food chains, local businesses, hotels, restaurants, and bakeries have been successfully integrated with the POS system. So far, 100 business outlets across AJK have been integrated.
Revenue Impact: Since February 2025, businesses integrated with the POS system contributed PKR 600 million in output tax during FY 2024-25. From July to December 2025, this figure exceeded PKR 700 million. The system is expected to increase annual sales tax and income tax collections by over PKR 1.5 billion.
Monitoring and Transparency: Special task forces have been formed to monitor the POS system. Real-time reporting is done via WhatsApp groups, and a dedicated POS Evaluation/Analysis Cell tracks tax compliance and system efficiency.
Digital Platforms:
The AJK Tax Asaan Android app was launched for invoice verification and tax payments. A POS Dashboard provides real-time performance reports. Federal Board of Revenue (FBR) Pakistan has acknowledged the successful implementation of this system and recommended it as a model for other regions.
Key Contributors:
Commissioner Inland Revenue, South Zone, Pakistan Revenue Automation Limited (PRAL) management
Technical staff/MIS wing of Inland Revenue, South Zone.
Outcome: The system has eliminated fake invoices, increased tax compliance, and set a benchmark model for revenue collection using modern IT and human resources.
3. Centralized Motor Vehicle Registration System,
Collaboration:
Agreements have been made with the Punjab Information Technology Board (PITB) and NADRA to introduce web-based and mobile app services for vehicle registration and motor tax payments.
Features:
24/7 digital payment system for challans
Biometric registration and smart cards
SMS-based notifications
Online tax payments and ownership transfers.
Legal Updates: Amendments to the AJK Motor Vehicles Ordinance 2025 introduced lifetime token facility for vehicles up to 1000cc, resulting in increased revenue.
4. AJK IRIS System (Inland Revenue Automation & Digital Reforms),
Modernization: The IRIS system, developed in collaboration with PRAL, has been upgraded with modern modules for online income tax return filing, refund tracking, withholding statements, ATL listings, and analytical dashboards.
Benefits:
Reduces the need for physical visits
Enhances transparency and real-time monitoring
Minimizes errors and delays in tax collection.
Outcome: A fully digital platform improving efficiency, taxpayer convenience, and long-term economic benefits.
5. Track & Trace System for Tobacco Sector,
Purpose: To prevent tax evasion, illegal production, and smuggling of tobacco products.
Implementation: AJCL/Authentix Mitas, an internationally licensed company working with FBR, has been engaged for AJK.
Mechanism: Third-party distributors supply tax stamps linked to the central system for verification and monitoring.
Impact: Ensures legal compliance, prevents counterfeit production, and strengthens revenue collection.
6. Recovery, Assessment, and Audit Initiatives
Revenue Collection: South Zone was assigned a target of PKR 56.662 billion for FY 2024-25 and successfully collected PKR 57.510 billion.
Recovery Efforts: A dedicated recovery cell issued around 400 notices and froze 15 bank accounts in June 2025, recovering PKR 70 million in overdue taxes.
Audits: 337 cases were audited, resulting in PKR 640 million additional tax revenue.
7. Effective Oversight of the Cigarette Sector,
Section 144 Enforcement: Night-time restrictions on cigarette transport, supply, and storage in Mirpur and Bhimber districts.
Counterfeit Control: Large-scale operations conducted with FBR, DG Intelligence, and Punjab Excise to seize counterfeit cigarettes.
Results: 587 cartons (6,792,500 cigarettes) confiscated in Mirpur; illegal warehouses sealed; multiple cases registered.
8. Staff Promotions and Financial Incentives
Merit-Based Promotions: Officers and staff across various cadres received timely promotions, improving morale and institutional stability.
Performance Allowances: Adjusted according to revised 2022 rates, providing financial relief and motivating performance.
9. Data Integration with FBR
Objective: To facilitate seamless transactions for businesses operating across AJK and Pakistan, preventing double taxation.
Status: An MoU has been signed; technical implementation is underway. Once completed, taxpayers will benefit from automated adjustments and increased trust in state institutions.
Conclusion:
The Department of Inland Revenue, Azad Jammu & Kashmir, has demonstrated exceptional institutional capability, reformist vision, and administrative commitment. Through IT modernization, POS invoicing, IRIS automation, motor vehicle registration, tobacco sector monitoring, audit/recovery initiatives, and staff development, the department has achieved historical revenue growth, enhanced transparency, and strengthened taxpayer confidence.
This period under Commissioner Syed Ansar Ali’s leadership represents a landmark phase in the department’s history for reforms, digital governance, and institutional excellence.