The Federal Board of Revenue (FBR) has exempted certain categories of goods supplied through digitally integrated and point-of-sale (POS)-compliant retailers from the retail price-based sales tax regime, with the changes taking effect from July 1, 2026.
The FBR issued Sales Tax General Order No. 11 of 2026 on Friday outlining the revised taxation framework.
According to the order, supplies made by registered manufacturers through their own FBR digitally integrated and POS-compliant retail outlets will fall outside the retail price-based taxation regime under Serial No. 65 of the Third Schedule. Instead, sales tax will be charged on the value of supply as defined under Section 2(46) of the Sales Tax Act.
For imports of goods covered under Serial No. 65 of the Third Schedule, sales tax will continue to be assessed and collected on a value equal to 130% of the value determined under Section 25 of the Customs Act, 1969, inclusive of applicable customs duties and Federal Excise Duty.
The FBR also excluded several other categories of transactions 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 FBR digitally integrated and POS-compliant retailers for onward sale to end consumers, and supplies made by digitally integrated registered manufacturers or registered importers to registered corporate entities, federal and provincial government departments, autonomous bodies, and statutory organizations purchasing goods for their own use.
The notification noted that under Section 3(2)(a) of the Sales Tax Act, 1990, sales tax on goods listed in the Third Schedule is generally levied on the basis of retail price.
It further stated that the Finance Act, 2026 introduced Serial No. 65 into the Third Schedule for all types of footwear, except where manufacturers exclusively sell their products through FBR digitally integrated and POS-compliant retail outlets.
Following the amendment, the FBR received representations from the Pakistan Footwear Manufacturers Association (PFMA) highlighting implementation and interpretation issues related to the new provision. The matter was subsequently reviewed under the relevant provisions of the Sales Tax Act, 1990.
The Board observed that supplies made through documented supply chains, including those involving FBR digitally integrated and POS-compliant retailers, are fully documented and electronically verifiable, with the value of such supplies readily ascertainable under the law. It also noted that footwear manufacturers supplying independent brand owners operating POS-compliant retail outlets generally do not determine the final retail price, which is set by retailers according to prevailing commercial practices.
The FBR concluded that the legislative objectives behind Serial No. 65 are achieved where such transactions remain within a documented and digitally verifiable supply chain.
Accordingly, the Board clarified that the levy, assessment, and collection of sales tax on goods covered under Serial No. 65 of the Third Schedule will be carried out in accordance with the Implementation Matrix provided in Annexure-A, which forms an integral part of the general order.
The FBR directed all Chief Commissioners Inland Revenue to ensure the strict, consistent, and uniform implementation of the order across their respective field formations.
The General Order came into force on July 1, 2026.
