Regulatory updates - Pakistan

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. 

On February 18, 2026, the Federal Board of Revenue (FBR) of Pakistan issued a draft notification proposing to replace Chapter VIIA of the Income Tax Rules, 2002 with a new framework requiring specified sectors to integrate e-invoicing/POS systems with FBR for real-time electronic invoices/bills, including QR codes, digital signatures, record retention, audit access, and a licensing regime for integrators.

Scope

Covered categories include, but are not limited to:

• restaurants;
• hotels/hostels/marriage halls/clubs;
• inter-city road travel;
• courier/cargo; personal care services;
• medical providers (with fee threshold exclusion);
• diagnostics/hospitals;
• gyms/clubs;
• photographers/event managers (with per-event fee threshold exclusion);
• accountants;
• retailers (with chain/mall/electricity bill/size-based tests);
• foreign exchange dealers; and
• private education institutions (with a monthly fee-per-child threshold exclusion).

Requirements for “integrated enterprises”

Notified taxpayers (“integrated enterprises”) must register, install, and integrate e-invoicing hardware/software with FBR’s computerised system, provide outlet/POS details via FBR’s online system, and ensure no supplies are made except through integrated outlets/POS/e-invoice or bill issuing machines.

Technical requirements

POS/e-invoicing systems must:

• support secure transmission of invoice/bill data to FBR and receipt of a unique FBR invoice/bill number,
• generate and print a QR code based on that number,
• create and record digital signatures,
• maintain logs for adjustments/cancellations and system events, and
• perform day/week/month closing routines.

Offline mode and business continuity

Invoices/bills issued during system failure (including internet or power disruption) must be clearly marked as offline mode and uploaded to FBR within 24 hours of restoration.

Licensing of integrators

The draft establishes a licensing framework for entities that integrate taxpayers’ software with FBR, including application documentation requirements, license validity/renewal, technical support duties, fee caps via general order, and cancellation procedures.

PRAL is designated to act as a licensed integrator for these purposes and may provide free-of-cost integration and downloadable software when required.