ISLAMABAD: The Federal Board of Revenue (FBR) has excluded certain supplies made through digitally integrated and point-of-sale-compliant channels from the retail price-based sales tax regime with effect from July 1, 2026. The relief was introduced through Sales Tax General Order No. 11 of 2026.
Under the order, supplies made by registered manufacturers through their own FBR digitally integrated and POS-compliant retail outlets will be taxed on the value of supply under Section 2(46) of the Sales Tax Act, 1990, instead of the retail price prescribed under Serial No. 65 of the Third Schedule.
The exclusion also applies to supplies made by importers to registered manufacturers or FBR digitally integrated and POS-compliant retailers.
Goods imported directly by compliant retailers for onward sale to consumers will receive the same treatment, along with supplies by digitally integrated registered manufacturers or registered importers to registered corporate entities, federal and provincial government departments, autonomous bodies and statutory bodies for their own use.
For imported goods covered by Serial No. 65, sales tax will be assessed on a value equal to 130% of the amount determined under Section 25 of the Customs Act, 1969, including applicable customs duties and Federal Excise Duty.
Under Section 3(2)(a) of the Sales Tax Act, goods listed in the Third Schedule are generally taxed on the basis of their retail price.
The Finance Act, 2026, inserted footwear of all types under Serial No. 65, except where manufacturers sell their products exclusively through FBR digitally integrated and POS-compliant retail outlets.
The Pakistan Footwear Manufacturers Association subsequently raised implementation and interpretation concerns with the FBR.
The Board said documented and electronically verifiable supply chains allowed transaction values to be readily determined under the law.
It also noted that footwear manufacturers supplying independent brand owners generally do not set the final retail price, which is determined by retailers under prevailing commercial practices.
The tax treatment of supplies covered by Serial No. 65 will be determined through the implementation matrix attached to the general order.
All Inland Revenue authorities have been directed to apply the matrix uniformly, while Chief Commissioners Inland Revenue have been instructed to ensure consistent implementation by field formations.
