Karachi Tax Bar Association

E-Invoicing Integration in
Pakistan
Compliance, Challenges & Best Practices

Presented by: Muhammad Usman Farooq (ACMA, CGMA, MBA, CICA,

ITP)

Date 22 May 2025

by Muhammad Usman Farooq

 Objectives of the Presentation

Understand e-Invoicing and its significance Review legal framework in Pakistan

significance

Explore technical integration process Identify challenges and solutions

Discuss compliance requirements and Future outlook

penalties
Introduction to Sales Tax E-Invoicing
Definition of e-Invoicing Tax Invoice
Sales Tax Rules 2006 – Rule 2. Definitions - Section 2(40) "tax invoice" means a document required to be issued
under section 23.
(xxi-c) "electronic invoicing" means electronic transmission and
storage of sales tax invoices, without the delivery of paper Section 23(1) First Proviso - Provided that the Board may, by
documents. notification in the official Gazette, specify such modified invoices for
different persons or classes of persons

Legal Requirements Integration Requirements

Substituted by Finance Act, 2024. Section 23\[(3) A registered person Section 40C(4) Notwithstanding anything contained in this Act, the
making a taxable supply shall, subject to such conditions, restrictions Board through notification in the official Gazette, may require any
and limitations as the Board may, by notification in the official Gazette, person or class of persons to integrate their electronic invoicing
specify to issue electronic invoices. system with the Board's Computerized System for real time reporting
of sales in such mode and manner and from such date as may be
specified therein; and

(5) Licensed integrator shall integrate electronic invoicing system of

registered persons referred to in sub-section (4) in such mode and
manner as may be prescribed.
Why Pakistan Opted it – FBR Vision
1. Enhancing Transparency and Reducing Tax Evasion
Fake/flying invoices have been a significant challenge in tax administration. By mandating real-time electronic invoicing, the FBR aims
to eradicate fraudulent invoicing practices, ensuring that all sales transactions are instantly recorded and transparent. This real-time
data capture enhances monitoring capabilities and diminishes opportunities for tax evasion, fostering a culture of accountability.

2. Improving Tax Compliance & Tax Collection

The system facilitates automatic validation and secure storage of invoices directly through the FBR's computerized platform,
minimizing human errors and delays. It ensures timely and accurate reporting of taxable supplies, leading to improved
compliance rates and increased revenue collection for the government.

3. Streamlining Tax Administration

Real-time electronic invoicing enables automated data collection and analysis, significantly reducing manual
interventions. This streamlining allows tax authorities to efficiently manage vast volumes of data, expedite processing
times, and make informed decisions based on comprehensive sales data analytics.

4. Facilitating Audit, Enforcement & Policy Formulation

The e-invoicing framework supports more effective audits by providing regulators with immediate access to
invoice data, enabling prompt identification of any discrepancies or irregularities. This capability improves
enforcement actions and supports the development of evidence-based policy initiatives to strengthen the tax
ecosystem.

5. Aligning with Global Practices / Digital Economy Promotion

Adopting electronic invoicing aligns Pakistan with international trade standards and modern digital
economy practices. This alignment facilitates seamless integration with global trade systems and
enhances Pakistan's competitiveness in the international markets.

6. Fair Competition:
By substantially reducing the grey economy and curbing illicit business practices, the system
empowers compliant businesses to compete on an even playing field, promoting market fairness
and economic stability.

7. QR Codes and IRNs – Customer Money:

The introduction of Quick Response (QR) codes and Invoice Registration Numbers (IRNs)
ensures secure invoice authentication and traceability, protecting customers' interests and
increasing confidence in electronic transactions.
Global context (Comparison – other countries like India, China, EU., GCC)

Feature Pakistan India China EU

Rollout Start 2020 (phased) 2020 1990s Varies (Italy: 2019+)

Scope Large enterprises Mid-to-large businesses All businesses Mostly B2G, expanding to
B2B
Compliance Maturity Developing Advanced Very advanced Advanced

Technology Usage Basic API/QR Codes API, IRN, QR Code Real-time digital fapiao Structured XML/UBL
formats
Enforcement Focus Sales tax GST VAT + compliance VAT + procurement
transparency
Country VAT Status E-Invoicing Status Maturity
Saudi Arabia Active (2018) Mandatory (since 2021) Advanced
UAE Active (2018) Voluntary / under rollout Emerging
Bahrain Active (2019) Planned Early
Oman Active (2021) Planned Initial
Qatar Not yet active Not yet applicable Preliminary
Kuwait Not yet active Not yet applicable None
Legal Framework in Pakistan
Who is required to comply/Taxpayer’s categories required to integrate
SRO 709(I)/2025 dated 22 April 2025 direct that the following registered persons
A.Corporate registered persons
B.Non-corporate registered persons
Shall electronically integrate their hardware and software with Board's computerized system through license integrator
or PRAL and shall generate and transmit electronic
invoices with effect from the date specified.
Timeline of implementation (with visuals). Compliance Timelines
• Corporate registered persons First day of June, 2025
• Non-Corporate registered persons First day of July, 2025
E Invoicing requirements and Obligations for Integrated Persons
The integrated person shall make all electronic invoicing hardware and software including payment counters comprising
point of sale at each outlet, available for installation of the systems and be responsible for smooth functioning of all the
hardware and software.REQUIREMENTS & OBLIGATIONS
Issue Response
Installation of e- The registered person notified under sub-rule (2) of rule 150Q hereinafter referred to as "integrated person" in this
invoicing system Chapter. shall register. install and integrate his electronic invoicing hardware and software with the Board's
computerized system in the manner specified by the Board through a Sales Tax General Order.
Information of outlets, The integrated person through Board's online system shall provide information of his outlets, points of sale or
POS or e-invoicing electronic invoicing machines as the case may be
machines
Debit and credit card, Board may require an integrated person to integrate the facility of debit and credit card machine. QR Code or any
QR & Digital other mode of digital transaction available at all the sale points and the sales through aforesaid means shall not be
transactions ordinarily refused.
Legal Framework in Pakistan
CCTV camera The Board may require an integrated person to record transactions on each point of sales by a CCTV camera and
the recording thereof shall be retained for a period of at least one month. Such recordings shall be provided to
the Commissioner concerned as and when demanded and for the period of time as specified by the Board
through a sales tax general order.
Exempt Supply In case of supply of exempt items, the electronic invoices shall also be issued through system integrated with
the Board's Computerized System under these rules.
Cost The cost for integration including the cost of equipment and electronic invoicing software or point of sales
software shall be borne by the integrated person.

PRAL shall provide free of cost integration services to the registered persons on demand.

PRAL, as and when required by the Board, shall provide a free of cost downloadable electronic invoicing
software or point of sales software on Board's official website.

The licensee shall charge fee for configuration and integration of electronic invoicing software or point of sale
software from the integrated persons not above the threshold as mav be specified by the Board through a sales
tax general order. No fee shall be payable by the Board and any of its field formations
Signboard The integrated person shall prominently display on each of the notified outlets, points of sale or electronic
invoicing machines a signboard bearing FBR's official logo along with the text "integrated with FBR" and also the
registration number of each electronic invoicing software or point of sales software verifiable through the
Board's verification services.
Online marketplace In case of online sale including online marketplace, the integrated person shall register such website, software
and mobile application with the Board's Computerized System to record the auto-electronic invoices as
specified by the Board through a Sales Tax General Order.
e-invoice Particulars As per particulars prescribed in Rule 150R(13)
Legal Framework in Pakistan
Record The invoice / debit & credit note & online sale so issued shall be retained as record for a period of six years on
Maintenance electronic media as provided under section 24 of the Act.
The electronic documents specified shall be stored in such manner that information at the time of original
transmission of the document is recreated at the time of departmental audit.
Debit / Credit Note The debit note and credit note shall also be issued electronically through the integrated system.
Audit & Access The integrated person shall provide access to premises and all the record specified in sections 22 and 23 of the Act
for the purposes of sections 25 and 38 of the Act to the Officer of inland Revenue as authorized by the Commissioner
having jurisdiction. The Board may issue instructions for technical audit.

Paper Invoice Provided that such integrated person shall continue to issue paper invoices until such time as extended by the
Commissioner for integration.

The invoices generated during any period of failure of electronic invoicing software or point of sales software
including disruption caused by internet or power failure shall be clearly identified as invoices issued in the offline
mode and shall be uploaded within 24 hours of restoration.
Operation failure RP will report to the Board and the concerned Commissioner within twenty-four hours of any operational failure,
damage disruptions or tampering of the system.

Report any inoperative electronic invoicing hardware and software within twenty-four hours with reasons along with
documentary evidence to the Commissioner holding the jurisdiction.

The invoices generated during any period of failure of electronic invoicing software or point of sales software
including disruption caused by internet or power failure shall be clearly identified as invoices issued in the offline
mode and shall be uploaded within 24 hours of restoration.
E-invoicing important issues
Issue Response
Functions of POS or e- It generate invoice data, invoice format, digital signature, transmit the data securely, receive the unique FBR
invoicing machines invoice number, encrypt and preserve data securely, generate & print the QR Code, perform closing on close of
period, maintaining logs and events on adjustment, cancellation & modification.

Annexure-C loading The Annexure C of the sales tax return shall be auto filled from the electronic invoices issued by the integrated
data person
Alert messages on any The electronic invoicing software or point of sales software shall be capable of generating and sending alert
malpractice or error messages to the Board's computerized system in case of any malpractice or error or any inconsistent action
noticed in the system and keeping a log thereof.

Extension The Commissioner inland Revenue having jurisdiction may allow extension in time. for up to sixty days in
aggregate with fifteen days intervals, for integration or compliance under this chapter

Electronic All the provisions of Electronic Transactions Ordinance, 2002 (Ll of 2002), relating to the recognition of
Transactions documents, records, information, communication and transaction in electronic form, accreditation of
Ordinance, 2002 certification service providers and for matters ancillary thereto, shall apply.

Verification of invoice The Board shall provide a facility on its website to the buyer of an integrated person to verify if the invoice issued
facility to him by such integrated person has been communicated to the Board's Computerized System.
E-invoicing important issues
Licensing Board shall notify a licensing committee which shall perform function in accordance with the provisions of rules l50Xl, l50XK
committee and l50XN or any other instructions or procedures, issued by the Board. Board shall notify convenor of the licensing
committee.
License Rule 150XI & l50XH provide procedure and application for grant of license.
application &
Procedure The license granted under these rules shall be subject to provisions of the Act and shall be valid for five years from date of
issuance. The license granted under these rules shall be non-transferable and shall not be allowed to be used by any sub-
License period contractor.
Licensee Post deployment maintenance of the system including setting up and maintenance of all information technology equipment
Responsibility connected to the electronic invoicing hardware and software
Authorized to upgrade the system hardware and software, fix all bugs; and immediately respond to troubleshoot any post
deployment problems for uninterrupted working of the system. Safe and secure capture of real-time transmission of sales
data from the electronic invoicing software or point of sales software to FBR database at all times.

Supervision, The Board shall notify the team responsible for overall supervision of the system and the steps to be taken to address
Enforcements problems encountered during operation of the systems.
& Petrol
The Board shall establish Inland Revenue enforcement network which shall be responsible for combatting evasion and
leakage of taxes payable on goods and services by way of enforcement units of the concerned filed formations.

To check and verily any of the eventualities, the enforcement squads of inland Revenue shall petrol the premises of the
integrated persons and verify, whether all the electronic invoicing software or point of sales software are integrated and
invoices are being reported to FBR
Facilitation Senior Project Manager Email :[email protected] Phone:0321-5326975
Staff Technical Support Officer Email: adeel.abbasi @pral.com.pk Phone:0315-4000009
Relevant SROs (list with dates)
SRO Purpose
S.R.O. 470(1)/2007 dated 9 Chapter XIV of the Sales Tax Rules 2006 - specified the procedure for issuance of electronic invoices - move towards
June 2007 digitization and documentation of economy

S.R.O. 1360(I)/2018 dated 12 Moving towards enhancing transparency, the FBR further introduced online integration of Tier-1 retailers under Chapter XIV -
November 2018 AA of the Rules making it mandatory for all Tier-1 Retailers (B2C) to integrate their retail outlets with the FBR's computerized
system for real-time reporting of sales, in the mode and manner, as prescribed therein.
S.R.0.344(I)/2020 dated 29 By amending SRO S.R.O. 1190(I)/2019 dated 2 October, 2019 , All Tier-1 retailers who have integrated all their POSs with the
April 2020. Board in terms of Chapter XIV-AA of Sales Tax Rules, 2006 may adjust input tax to the extent of ninety-five percent of the
output tax for that tax period and the excess amount shall be carried forward to the next tax period as per second proviso to
subsection (1) and sub-section (4) of section 8B of the Sales Tax Act, 1990.

STGO 01 of 2022 dated 03 The Finance Act, 2019 added sub-section (6) in section 8B of the Sales Tax Act, 1990 whereby a Tier-1 Retailer "(T-1R)" who
August 2021 did not integrate its retail outlet in the manner prescribed under sub-section (9A) of section of the STA, 1990 during a tax
period, its adjustable input tax for that period would be reduced by 15%. The figure of 15% has been raised to 60% vide
Finance Act, 2021.
In order to operationalize this important provision of law, a system-based approach is being adopted whereby all T-1Rs
liable to be integrated but not integrated, with effect from July 2021 (Sales Tax Returns filed in August, 2021) will be dealt
with as per the procedure laid down.
SRO 1006 dated 09 August, Specify standardized format for invoices issued under sub-rules (5) and (6) of rule 150ZEB of the Sales Tax Rules 2006
2021
S.R.O. 1063(l)/2021 dated 24 The FBR then also introduced Chapter XIV - BB in the Rules regarding integration of Tier-1 retailers and licensing thereof
August 2021 through requiring that no person shall carry out integration of the retailers through software unless he has obtained a
license.
S.R.O.1279(I)/2021 Levy service charges at a rate of Rupee one per invoice issued through all points of sale (POS) integrated with the Board's
computerized system for the real time reporting of sales, which shall be collected by Tier1 retailers integrated with the
Board's computerized system and deposited in a designated account along with monthly payment of sales tax and filing of
the sales tax return.
Relevant SROs (list with dates)
STGO 17 of 2022, dated Procedure for reversal of bar on input tax adjustment by 60% (i.e. the exclusion), as provided for is STGO 1 of
13.05.2022 dated 03.8.2021 has been automated. STGO 1 of 2022 dated 03.8.2021 is, thus amended to the extent of
reversal of bar on input tax adjustment by 60% / issuance of exclusion certificates at as per procedure.

S.R.O. 1525 (1)/2023 dated Direct that further amendments shall be made in the Sales Tax Rules, 2006, namely in the Rules in Chapter XIV.
10th November 2023. Rule 150Q to 150Y.

S.R.O. 1788(1)2023 dated Chapter XIV-BB was further amended requiring that no person shall carry out integration of the registered
11 December 2023 persons including Tier-1 retailers through software unless he has obtained a license from the FBR.

S.R.O. No. 1525-DI Notify the following registered persons in terms of Rule 150Q of the S.R.O. 1525 (1) /2023
(1)/2023, dated 12 • all importers and manufacturers of fast moving consumer goods,
December 2023
• all wholesalers (including dealers), distributors of fast moving consumer goods,
• all wholesaler-cum-retailers engaged in bulk import and supply of fast moving consumer goods on wholesale
basis to the retailers

S.R.O 1842(I)/2023, dated Retailers, whose deductible withholding tax under section 236H of the Income Tax Ordinance, 2001 during
21st December, 2023 immediately preceding twelve consecutive months has exceeded Rs. 100,000 have been prescribed as Tier-1
retailers under clause (g) of section 2(43A) of the Sales Tax Act, 1990.
SRO 28(I)/2024 dated 10 notify that the registered persons in terms of SRO 1525-DI(I)/2023 shall transmit sales tax invoices electronically
January 2024 in terms of rule 150Q.
Specify that this Notification shall come into force on and from the 1st day of February, 2024.
Relevant SROs (list with dates)
STGO 01 2024 23 April Operationalize section 2(43A)/236H / SRO 1842(I)/2023 and a system-based approach has been adopted
2024 whereby all T-1Rs who are liable to integrate but have not yet integrated, w.e.f. June-2024 (Sales Tax Returns
filed in July, 2024) are to be dealt with as per the procedure laid down.
SRO 69(I)/2025 dated 29th FBR has replaced Chapter XIV of the Rules. The new Chapter XIV not only prescribes new rules for licensing,
January 2025. integration and issuance of electronic invoices but has also merged the rules / requirements in Chapter XIV-
AA and XIV-BB in Chapter XIV. As a result, Chapter XIV-AA and XIV-BB of the Rules have been omitted.

S.R.o.709(I)/2025 dated 22 Direct that the following registered persons

April 2025 A. Corporate registered Persons
B. Non-Corporate registered persons
shall electronically integrate their hardware and software with Board's computerized system through license
integrator or PRAL and shall generate and transmit electronic invoices with effect from the date specified.
Sales Tax Circular #1 of At present, following are the approved license integrators:
202SIIR Operations dated (a) MIS Pakistan Revenue Automation Limited (Shall offer free of cost integration
10 April 2025
services.)
(b) MIS Haball (Pvt) Ltd .
(c) MIS EY (Pvt) Ltd.
(d) Mis WebDNAworks (Pvt) Ltd .
F. No. 1(141) ST- Extend the date of integration with the Board's computerized system through license integrator or PRAL
L&P/2025/55105-R Corporate registered persons First day of June, 2025
Non-Corporate registered persons First day of July, 2025
Sales Tax Act, 1990 section summary
Section Provision Summary Offences / Non-compliance
3(9A) Mandates retailers (Tier-1 and others as notified) to integrate with Failure to register or integrate with FBR’s
FBR’s POS/e-invoicing system. computerized system.
22 Requires registered persons to maintain detailed records of supplies, Failure to maintain proper records enabling tax
purchases, and sales (including electronically recorded data). liability ascertainment.

23 Obliges issuance of serially numbered tax invoices with mandatory Non-issuance or incorrect issuance of invoices.
contents (including CNIC/NTN, tax rates, etc.) and enables electronic 0

invoicing requirements.

40C(4)(5) Empowers FBR to mandate e-invoicing integration for any person/class Failure to integrate as per notification; failure of
via notification. Licensed integrators are responsible for setup. integrators to perform duty.

50(1) FBR is empowered to make rules via official notification for carrying FBR can create or amend rules governing e-
out the purposes of the Act, including charging fees for return invoicing, integration procedures, system usage
processing, claims, and document preparation. requirements, and associated service fees.

56C FBR may introduce prize schemes to encourage the public to make Promotes compliance and transparency through
purchases from registered persons issuing tax invoices; also, FBR can customer engagement and random verification;
conduct mystery shopping to verify invoices issued by Tier-1 retailers enforces accountability for Tier-1 retailers using
integrated with its system, and in case of any discrepancy, all relevant e-invoicing.
legal provisions will apply.
 E-Invoicing Process Flow

The visual diagram above illustrates the complete e-invoicing process flow, from invoice creation through validation,
submission to FBR, and final delivery to customers with proper authentication elements.
 E-Invoicing Process Flow
E-Invoicing

Data Mapping as
Data Validation
needed
FBR
API ETL & Register B2B &
ERP or Queue UUID Sequence Number Queue
Integration/ Web B2C Documents,
POS Flat files Management Management
Transactions,
System APIs acknowledges
(SFTP) Reporting Module Archival
UUID & QR Codes

QR code Generator Registration Credits

User Management Backoffice Support

The visual diagram above illustrates the complete e-invoicing process flow, from invoice creation through validation,
submission to FBR, and final delivery to customers with proper authentication elements.
PROCESS FLOW
PROCESS FLOW - II
PROCESS FLOW - III
Technical Integration Requirements
API Documentation / Specifications
• Facilitates real-time digital invoice data sharing between taxpayers and FBR
• Key APIs: Post Invoice Data, Validate Invoice Data, Reference APIs
• Security: Requires a Bearer token (valid for 5 years) in the header for authentication
• Response Codes: 200 (Success), 401 (Unauthorized), 500 (Server Error)
• Endpoints: Sandbox and Production environments use the same URLs, differentiated by tokens

Secure Connection (SSL, IP Whitelisting)

• SSL/TLS: All API communications are secured via HTTPS
• IP Whitelisting: Taxpayers must register their server IPs with FBR for API access
0

• Token-Based Authentication: Each request requires a security token issued by PRAL

JSON Schema / Sample E-Invoice Structure

• Invoice Header: Mandatory fields include Invoice Type, Invoice Date, seller/buyer details
• Invoice Items: Mandatory fields include hsCode, productDescription, rate, quantity, value Sales Excluding
ST, salesTaxApplicable
Technical Integration Requirements

Software/Hardware Readiness
• ERP/ POS systems must support API integration or manual invoice entry
• Must comply with FBR's QR code and logo printing standards
• PRAL Sandbox: Free testing environment provided for API integration

Role of Software Vendors

• Vendors must adapt systems to generate FBR-compliant invoices
• Integrate FBR's APIs for real-time validation/submission
Assist taxpayers with IP whitelisting, token management, and error handling
0
Technical Integration Requirements
Technical Integration Requirements
Technical Integration Requirements
Technical Integration Requirements
Technical Integration Requirements
Technical Integration Requirements
Technical Integration Requirements
Benefits of E-Invoicing Integration for
for Businesses
input
1 Compliance
2
Faster Input Tax Credit Claims Streamlined Compliance
Validated invoices are automatically Simplifies filing of returns (such as Annex-C
available for input tax adjustments. Fewer and Sales Tax Returns). Reduces paperwork
rejections and delays from FBR. and record-keeping burdens. Automation of
invoice creation and transmission minimizes
human error.

Cost / Time 3
Cost and Time Savings
Lower administrative and storage costs.
Faster reconciliations and reduced audit
exposure. Timely credit claims and clearer
transaction trails improve financial planning.
• 03 – Track and trace system

Advantages for Government

Online integration offers several advantages for government agencies

Improved Efficiency Enhanced Accuracy Real-Time Data Access

Streamlined Reporting Cost Savings Increased Compliance

Improved Public Integrated Payment Reduction in Tax

Services Options Evasion
Common Challenges & Practical Issues in E-Invoicing Integration
Integration
Legacy System Compatibility Internet Connectivity Issues
Many businesses rely on outdated or Stable internet is essential for real-
fragmented ERP/accounting systems, time data transmission to FBR.
making it difficult to integrate Businesses in rural or low-bandwidth
seamlessly with FBR's real-time areas often face frequent
invoicing platform. disconnections.
Handling Exemptions & Special FBR Invoice Management
Scenarios System Downtime
Complexity arises when dealing with Temporary unavailability or slow
non-standard transactions, such as response times of the FBR IMS
exports, multiple branches, or B2B server can halt invoice generation,
vs. B2C invoicing formats. affecting operations.
Data Privacy and Cybersecurity Training & Awareness
Integration involves sharing sensitive
Lack of proper training for finance, IT,
transaction and customer data, raising
and sales teams can lead to misuse of
concerns over unauthorized access
the system or generation of invalid
and data breaches.
invoices.
Best Practices for Smooth Integration
Early Testing in Sandbox Environment
Conduct thorough testing in the FBR-provided sandbox environment to identify bugs and ensure compliance before going live.

Regular Monitoring and Health Checks

Implement routine performance monitoring and system health checks to ensure seamless real-time reporting of sales data.

Engaging Reliable Licensed Software Integrators

Work with FBR-licensed software integrators who are authorized to develop and implement compliant e-invoicing systems.

Keeping Systems Updated with New SRO Changes

Ensure invoicing systems are promptly updated to reflect any regulatory changes from FBR's Statutory
Regulatory Orders.

Ongoing Staff Training

Invest in continuous training of finance, sales, and IT staff to ensure they understand the
e-invoicing system.

Data Security and Backup Protocols

Implement robust data security protocols including encryption, access
controls, audit logs, and automated backup systems.
Consequences – Penalties and Non-
compliance Risks
• Rule 150X. Consequences of non-compliance or contravention.- (1) The integrated person
who is found to have tampered with the system or made sales in the manner otherwise than
as prescribed in this Chapter, or who contravenes any of the provisions of this Chapter, shall
be subject to penalty under section 33 and any restriction under any provisions of the Act or
the rules made thereunder.

• Rule 150XD. Where an integrated person does not account for sales without generating an
invoice countering QR code or FBR invoice number, the Officer of Inland Revenue shall
compute the taxes on such goods relating to unaccounted for invoices and recover the same
under the relevant provisions of law, besides any other action including penal action that
may be taken under the Act or the rules made there under.

• Section (37) “tax fraud” (c) making taxable supplies of goods without issuing any tax invoice,
in violation of the provisions of this Act or the rules made thereunder;

• (g) falsification or causing falsification of invoice or substitution of financial records or

production of fake accounts or documents or furnishing of any false information through
human, mechanical or electronic means with an intention to evade tax due or claim
inadmissible refund;

• Section 11D. Best judgment Assessment. — (1) Where a person, (2) For the purposes of
clause (b) of sub-section (1), the officer of Inland Revenue may also disallow or reduce a
registered person input tax on goods if the registered person is unable, to provide invoice or
other record or evidence of the transaction or circumstances giving rise to such claim.
 Consequences – Penalties
and Non-compliance Risks
• Section 21. De-registration, blacklisting and suspension of registration.
• (2) Notwithstanding anything contained in this Act, in cases where the Commissioner is satisfied that a registered
person is found to have issued fake invoices or has otherwise committed tax fraud, he may issue an order of
suspension and blacklisting such person or suspend his registration in accordance with such procedure as the
Board may by notification in the official Gazette, prescribe.

• (6) In case a Tier-1 retailer does not integrate his retail outlet in the manner as prescribed under sub-section (9A)
of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be
reduced by 60%.

• Section 14AB.Discontinuance of gas and electricity connections. – Notwithstanding anything contained in this
Act or any other law for the time being in force, the Board shall have power through Sales Tax General Order to
direct the gas and electricity distribution companies for discontinuing the gas and electricity connections of any
person who fall in the following categories, namely: – (a) Any person, including tier-1 retailers, who fail to register
for sales tax purpose or 5 (b) Notified tier-1 retailers registered but not integrated with the Board’s Computerized
System: Provided that upon registration or integration, as the case may be, of the above said persons, the Board
shall notify the restoration of their gas or electricity connection through Sales Tax General Order.

• Section 33 - Tabular summary of consequences of not integrating business for e-invoicing and other related non-
compliance or violations, based on Section 33 of the Sales Tax Act, 1990
 Consequences – Penalties and Non-compliance Risks
Offence Penalty Section of the Act

Failure to integrate business for e-invoicing (first • PKR 500,000 (1st default) Section 3(9A) &
to fourth default) • PKR 1,000,000 (2nd default) 40C(4)
• PKR 2,000,000 (3rd default)
• PKR 3,000,000 (4th default)
• Premises liable to sealing

Failure to integrate business with FBR’s • Penalty up to PKR 1,000,000 Section 40C
computerized system • If non-compliance continues for 2+ months:
Premises to be sealed
Conducting business in a way to avoid e- • PKR 500,000 or 200% of tax involved (whichever is higher) Section 3(9A),
monitoring (e.g. issuing invoices without • Imprisonment up to 2 years or fine up to PKR 2,000,000, or Section 40C
barcode/QR code, duplicate invoice numbers, both
or counterfeit QR codes) • Premises liable to sealing

Licensed integrator fails to integrate registered • PKR 1,000,000 or 1% of suppressed sales (whichever is Section 40C(5)
persons higher)

Misuse of the computerized system (e.g. • PKR 25,000 or 100% of tax involved (whichever is higher) Section 50A
unauthorized access, falsifying info, using • Imprisonment up to 1 year, or fine equal to evaded tax, or
others' user ID) both
 Consequences – Penalties and Non-compliance Risks
• Section 21. Deductions not allowed. — Except as otherwise provided in this Ordinance, no
deduction shall be allowed in computing the income of a person under the head “Income from
Business” for — (r) any expenditure attributable to sales claimed by any person who is required
to integrate but fails to integrate his business with the Board through approved fiscal electronic
device and software: Provided that disallowance of expenditure under this clause shall not
exceed eight percent of the allowable deduction.

• Section 64D. Any person required to integrate with the FBR’s computerized system for real-
time reporting of sales or receipts is entitled to a tax credit for the amount invested in the
purchase of a point of sale (POS) machine. The allowable tax credit for the tax year in which
the POS machine is installed, integrated, and configured shall be the lesser of the actual
investment made in purchasing the POS machine or PKR 150,000 per machine. A POS
machine is defined as a device used to process and record sales transactions for goods or
services, whether the payment is made in cash, by credit or debit card, or through online
payment in an internet-enabled environment
Future Outlook & FBR's Vision

Supply Chain Digitization

A major focus area for FBR is the end-to-end digitization of the supply chain,
enabling real-time tracking of goods from manufacturing and import to
distribution and final sale. This initiative aims to reduce tax evasion, eliminate
undocumented transactions, and increase overall tax collection.

Development of a Comprehensive Digital Reporting Ecosystem

Ecosystem
FBR is working towards establishing a fully digital reporting infrastructure,
including seamless integration of systems such as Sales Tax Returns (STR),
CNIC validation for buyer identification, and Point of Sale (POS) reporting.
This ecosystem will enable automated compliance, data accuracy, and
efficient audit mechanisms.

Transition to a Fully Digitized VAT System

The ultimate vision is to implement a comprehensive Value Added Tax (VAT)

regime that is fully digitized and automated. This includes electronic
invoicing, real-time tax deduction and remittance, and centralized
monitoring, creating a more transparent, efficient, and taxpayer-friendly
environment.
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