FBR Revises Sales Tax Rules for Digital POS Supplies

The Federal Board of Revenue (FBR) has exempted certain transactions conducted through digitally integrated and point-of-sale (POS)-compliant channels from the retail price-based sales tax regime, with the revised treatment taking effect from July 1, 2026. The change has been implemented through Sales Tax General Order No. 11 of 2026.

Under the General Order, supplies made by registered manufacturers through their own FBR digitally integrated and POS-compliant retail outlets will now be subject to sales tax based on the value of supply under Section 2(46) of the Sales Tax Act, 1990, instead of being taxed on the retail price prescribed under Serial No. 65 of the Third Schedule.

The revised tax treatment also extends to supplies made by importers to registered manufacturers or to FBR digitally integrated and POS-compliant retailers.

Similarly, imported goods brought directly by compliant retailers for onward sale to consumers will qualify for the same valuation method. The relief also covers supplies made by digitally integrated registered manufacturers or registered importers to registered corporate entities, federal and provincial government departments, autonomous organisations, and statutory bodies where the goods are acquired for their own use.

For imported goods falling under Serial No. 65, sales tax will be calculated on a value equal to 130% of the value determined under Section 25 of the Customs Act, 1969, inclusive of applicable customs duties and Federal Excise Duty (FED).

Under Section 3(2)(a) of the Sales Tax Act, 1990, goods specified in the Third Schedule are ordinarily subject to sales tax based on their retail price.

The Finance Act, 2026, expanded Serial No. 65 to include all categories of footwear, except products sold exclusively through FBR digitally integrated and POS-compliant retail outlets operated by manufacturers.

Following the legislative changes, the Pakistan Footwear Manufacturers Association raised several concerns before the FBR regarding the practical implementation and interpretation of the revised tax provisions.

In response, the FBR stated that digitally documented and electronically verifiable supply chains enable transaction values to be accurately determined in accordance with the law.

The Board further observed that footwear manufacturers supplying products to independent brand owners generally do not determine the final retail price, as retail pricing is typically established by retailers under prevailing commercial arrangements.

According to the General Order, the applicable sales tax treatment for supplies covered under Serial No. 65 will be determined in accordance with the implementation matrix attached to the notification.

The FBR has directed all Inland Revenue authorities to implement the prescribed matrix uniformly, while Chief Commissioners Inland Revenue have been instructed to ensure consistent application of the revised procedure across all field formations.