Key Takeaways
- Goods transferred from a factory to a registered person’s own warehouse under the same STRN are no longer considered taxable supplies.
- A Stock Transfer Note (STN) is required for such movements, which must be endorsed ‘Stock Transfer — Not a Taxable Supply’.
- Field formations are instructed to avoid unnecessary harassment and to follow detailed SOPs.
The Federal Board of Revenue (FBR) has issued a directive to streamline the movement of goods within companies, eliminating the need for tax invoices for intra-company transfers. This move aims to reduce administrative burdens and prevent harassment of taxpayers.
According to the Sales Tax General Order No. 25 of 2026, issued on Monday, goods moving between a factory and a warehouse under the same Sales Tax Registration Number (STRN) are not considered taxable supplies. Consequently, digital invoices are not required for such inter-premises movements.
However, the FBR has mandated the use of a Stock Transfer Note (STN), which must be sequentially numbered and prominently endorsed with the phrase ‘Stock Transfer — Not a Taxable Supply’. The value of goods should be recorded strictly at cost for inventory control, without resembling a tax invoice.
The STN must accompany consignments at all times during transit and be produced on demand at any checkpost. Upon receipt, the warehouse manager must acknowledge the consignment and update the warehouse stock register, while the factory must correspondingly update its own records under Rule 22.
Where the receiving warehouse holds a separate STRN, the movement will be treated as a taxable supply, mandating the issuance of a digital invoice through the licensed integrator or PRAL, account for output tax, and reflect the transaction in the sales tax return. The STN procedure cannot substitute for invoicing in these circumstances.
To prevent mischaracterisation during transit checks, the FBR has laid down detailed standard operating procedures (SOPs) governing the movement of goods between a factory and a registered person’s own warehouse. These SOPs clarify that such transfers are not taxable supplies.
The order further instructs field formations not to treat an STN as noncompliance when both premises share the same STRN. Conversely, any consignment moving without either a tax invoice or a STN will be deemed prima facie undocumented and proceeded against under the law.
The directive also directs field formations to avoid unnecessary harassment. Officers are barred from demanding CNICs of drivers or detaining vehicles without proper cause. Goods in transit are not to be physically checked or unloaded, except for items listed in the Third Schedule, which may be inspected solely to verify retail price embossing.
The FBR has emphasized that harassment of taxpayers, in any form or manner, is highly objectionable and shall not be tolerated. Any departure from these instructions will be viewed seriously.
