Key Takeaways
- The Federal Board of Revenue (FBR) has exempted select point-of-sales (POS) compliant retailers from retail price-based taxation.
- Excluded categories include supplies made by registered manufacturers through their own FBR digitally integrated and POS-compliant outlets.
- Imports of goods specified under Serial No. 65 of the Third Schedule are subject to a value equal to 130 percent of the determined value.
The Federal Board of Revenue (FBR) has issued a sales tax general order, effective from July 1, 2026, exempting certain categories of supply made by digitally integrated and point-of-sales (POS) compliant retailers. This move is aimed at streamlining the taxation process for select retail outlets.
According to the notification, supplies made by registered manufacturers through their own FBR digitally integrated and POS-compliant retail outlets will be outside the scope of the retail price-based taxation regime prescribed under Serial No. 65 of the Third Schedule. The sales tax on these goods will be charged based on the value of supply as defined in section 2 (46) of the Act.
For imports of goods specified under Serial No. 65, the FBR has clarified that sales tax is assessable and collectable on a value equal to 130 percent of the value determined under Section 25 of the Customs Act, inclusive of applicable customs duties and Federal Excise Duty. This adjustment ensures that the imported goods are taxed appropriately.
The FBR’s notification also covers other supplies excluded from the retail price-based taxation regime. These include supplies made by importers to registered manufacturers or FBR digitally integrated and POS-compliant retailers; goods imported directly by such retailers for subsequent supply to end consumers, and supplies made by digitally integrated registered manufacturers or registered importers to registered corporate entities, Federal or Provincial Government departments, autonomous bodies, or statutory bodies as end-consumers for their own use.
The decision was taken following representations from the Pakistan Footwear Manufacturers Association (PFMA), which highlighted certain implementation and interpretational issues arising from the application of Serial No. 65 of the Third Schedule. The FBR observed that supplies made through documented supply chains, including those to and by FBR digitally integrated and POS-compliant retailers, are fully documented and electronically verifiable.
The Board noted that manufacturers supplying goods to independent brand owners operating FBR digitally integrated and POS-compliant retail outlets do not determine the ultimate retail price of such goods. These prices are fixed by the retailer in accordance with prevailing commercial practices. The FBR is satisfied that the legislative objectives underlying Serial No. 65 are duly achieved, as these supplies remain within the documented and digitally verifiable supply chain.
This clarification aims to ensure that the basis for the levy, assessment, and collection of sales tax in respect of goods specified under serial number 65 of the Third Schedule is determined accurately and efficiently.
