ISLAMABAD: The Federal Board of Revenue (FBR) has issued Sales Tax General Order (STGO) No. 11 of 2026, clarifying the sales tax treatment for footwear supplied through digitally integrated and POS-compliant retail networks.
The order, issued on July 17, 2026, addresses concerns raised by the Pakistan Footwear Manufacturers Association following the inclusion of all types of footwear in the Third Schedule of the Sales Tax Act, 1990, through the Finance Act, 2026.
Under the Third Schedule, sales tax is generally charged on the retail price of goods. However, the FBR acknowledged that many footwear manufacturers sell products to independent brand owners and retailers who determine the final retail price through FBR-integrated POS systems.
To resolve this issue, the FBR has allowed sales tax to be charged on the value of supply, instead of the retail price, where the supply chain is fully documented and electronically verifiable.
The concession applies to supplies made by registered manufacturers through their own POS-integrated outlets, imports supplied to registered manufacturers or integrated retailers, direct imports by POS-compliant retailers for onward sale to consumers, and supplies to registered companies, government departments and statutory bodies for their own use.
For qualifying imports of footwear, sales tax will be calculated on 130 percent of the customs value, including customs duties and Federal Excise Duty, instead of the retail price.
The clarification is effective from July 1, 2026, and the FBR has directed all Chief Commissioners of Inland Revenue to ensure its uniform implementation across the country.
