New Sales Tax Regulation – Key Information for All Retailers
The Federal Board of Revenue (FBR) has made a significant change to the Sales Tax Rules, 2006 through S.R.O. 2071(I)/2025, which was announced on 3 November 2025.
This adjustment has a direct impact on wholesalers, distributors, and high-volume retailers operating throughout Pakistan.
According to the updated regulations, all businesses classified as Tier-I Retailers are now required to connect their sales and invoicing systems with the FBR’s digital platform, as outlined in Section 2(43A)(g) of the Sales Tax Act, 1990.
This initiative is part of the FBR’s broader plan to digitize the country and enhance transparency, record-keeping, and adherence to tax laws.
Who Is Required to Integrate With FBR?
The new regulation applies to retailers and distributors whose withholding tax under Income Tax provisions surpasses:
- Rs. 100,000 under Section 236G (for payments to distributors or wholesalers)
- Rs. 500,000 under Section 236H (for payments to retailers)
If your company exceeded either of these limits during the immediately preceding period, then integration with the FBR system is now mandatory for you.
What Does System Integration Mean for Retailers?
Integrating with the FBR means your Point-of-Sale (POS) or invoicing software must be directly linked to the FBR system to support:
- Real-time reporting of sales
- Accurate and automatic tax computations
- Immediate documentation and visibility of transactions
- Lower chances of being audited or facing penalties
This ensures complete transparency and allows retailers to maintain compliance without relying on manual records.
Key Clarifications to Be Aware Of
Tax experts have pointed out that the SRO contains some ambiguity, especially regarding the phrase “immediately preceding period.”
In the past, the Income Tax Ordinance used a 12-month calculation period. However, the SRO does not clearly state whether the FBR intends for the threshold to be assessed on a monthly or annual (12-month) basis. Because of this unclear wording, many retailers may need further guidance from the FBR on how the threshold will be applied in practice.
Final Summary
Yes, this update is genuine and official, and has already been communicated by the FBR.
If your business is involved in high-volume distribution or retail and regularly meets or exceeds the 236G or 236H withholding tax limits, now is the time to take action:
- Check your tax and withholding status for the previous period
- Determine if your business meets the criteria for Tier-I retailers
- Upgrade or integrate your POS system with the FBR’s infrastructure
- Seek advice from a tax professional to avoid any penalties resulting from non-compliance
The FBR’s new digital integration rule aims to foster a more transparent, tech-savvy, and well-documented economy. Prompt compliance will help your business stay protected.
