Regulatory updates - Pakistan

On September 29, 2026, the FBR issued S.R.O. 1666(I)/2026, extending the existing electronic invoicing framework beyond sales tax. A related notification, S.R.O. 1667(I)/2026, supports this change for federal excise invoices. Together, they apply the same e-invoicing system to federal excise duty and to Islamabad's tax on services.

The integration, invoice generation, transmission, validation, storage and verification procedures now also cover federal excise and taxable services in the Islamabad capital territory. Businesses already integrated with the FBR system do not need a separate technical integration for these additional taxes.

Where several taxes apply to one transaction, a single electronic invoice may be used, provided sales tax, federal excise duty and services tax are separately identifiable. Existing integrator licenses also extend to the additional tax areas once applicable.

The FBR has issued new sales tax provisions to strengthen enforcement against non-compliant taxpayers. Businesses that fail to integrate with FBR's digital monitoring systems will now face a penalty of one million rupees. If the violation continues after one month, a second penalty of up to five million rupees will apply. Business premises may also be sealed, with or without a penalty, depending on the case.

A new clause targets fake and flying invoices. If a business is found issuing invoices for transactions that never took place, it will face a penalty equal to the full value of the fake invoice, including sales tax. The business will also be listed on a new public register called the Simulated Invoice Issuers register. Any company that claims input tax based on invoices from a listed business will automatically lose that tax credit from the date of listing. A business can only be removed from the register after paying all penalties and surcharges and proving compliance.

Another new clause addresses input tax that cannot be matched with the supplier's declared output tax. In such cases, the claiming business must pay a penalty of 20 percent of the unmatched amount, along with reversing the credit and paying a default surcharge.

Overall, the FBR said these measures aim to improve digital compliance, reduce fraudulent invoicing, and encourage accurate reporting throughout the supply chain.

Issued under Sales Tax General Order No. 01 of 2026 by the Federal Board of Revenue (FBR), the update confirms mandatory real‑time reporting through FBR‑licensed integrators and sharply limits correction options once an invoice is issued. 

Clarifications on systems architecture 

Under the clarified rules: 

• All invoices must be issued electronically. 

• Invoices must be reported to the FBR in real time. 

• Transmission must occur through FBR‑licensed integrators. 

• Companies may use one or multiple licensed integrators. 

This confirms that Pakistan operates a clearance‑based CTC model, allowing technical flexibility through multiple providers while enforcing strict, centralized reporting to the tax authority. 

Clarifications on invoice corrections 

Once an invoice is issued, correction options are time‑restricted: 

• Within 72 hours, invoices may be cancelled, amended, or deleted, but only through the FBR system. 

• After 72 hours, direct changes are no longer permitted, and any correction requires approval from the Commissioner Inland Revenue. 

These rules significantly limit the ability to make retroactive adjustments and are designed to lock transaction data shortly after issuance.