Y.z Associates-Tax Consultants

26/08/2026

صلی اللہ عیلہ۔وسلم ❤️

25/08/2026

Dear PRA Taxpayers,

An error of Business ID *"Please provide correct business ID against invoice no.."* while uploading the sales via sales invoice template for tax period July 2026 is resolved by PRAL.

*PRA Taxpayers can easily now upload their sales via invoice management tab.*

24/08/2026

*FBR defines ‘sales tax’ for Pakistan’s tax year 2027*
Federal Board of Revenue (FBR) has defined the term *‘sales tax’* under the Sales Tax Act, 1990 for tax year 2027, providing clarity on the amounts covered by the term for taxpayers.

According to the Sales Tax Act, 1990, updated up to June 30, 2026, “sales tax” includes the tax, additional tax or default surcharge levied under the law.

The definition also covers any fine, penalty or fee imposed or charged under the Sales Tax Act. However, fees and service charges imposed and collected under Section 76 are excluded from the definition.

In addition, the term “sales tax” includes any other sum payable under the provisions of the Sales Tax Act or the rules made under the law.

The definition therefore covers not only the principal sales tax liability but also certain additional amounts that may become payable under the sales tax framework.

*What is a ‘sales tax account’?*
The FBR has also defined the term *‘sales tax account’* under the Sales Tax Act, 1990.

A sales tax account means an account representing the double-entry recording of sales tax transactions in the books of account.

The definition provides taxpayers with a legal and accounting framework for recording sales tax-related transactions in their financial records.

*The FBR’s updated Sales Tax Act forms part of the tax legislation applicable for tax year 2027 and incorporates amendments and updates made up to June 30, 2026.*

24/08/2026

Federal Board of Revenue (FBR) has introduced a time-bound procedure for processing sales tax registration applications submitted by low-risk applicants, directing field offices to grant registration, where practicable, within three working days.

The instructions were issued through Sales Tax General Order (STGO) No. 20 of 2026 – IR Operations, aimed at making sales tax registration more transparent, efficient and facilitative while maintaining safeguards against fraudulent or fictitious registrations.

The FBR said registration of persons liable to sales tax would continue to be governed by the Sales Tax Act, 1990 and Chapter-I of the Sales Tax Rules, 2006.

*Risk-based processing of applications*
Under Rule 5 of the Sales Tax Rules, applicants are required to submit the prescribed registration application electronically along with the necessary information and documents.

These include a bank account certificate, utility details and photographs of business premises. Manufacturers are additionally required to provide photographs of machinery and industrial electricity or gas meters.

The rules also empower the FBR to require pre-verification, post-verification or both in the case of manufacturers through field offices or a third party authorised by the Board.

Under the new instructions, all sales tax registration applications submitted through the computerised system or IRIS will be processed strictly according to prescribed risk parameters.

Applications classified as low risk through the computerized risk-management system will receive priority and be processed on a time-bound basis.

*Registration to be granted within three working days*
The FBR directed local registration offices to process complete low-risk applications without unnecessary delay.

Where an application is complete and all prescribed requirements have been fulfilled, registration should, as far as practicable, be granted within three working days.

The measure is intended to facilitate legitim

24/08/2026

*FBR explains ‘taxable activity’ under Sales Tax Act for tax year 2027*
Federal Board of Revenue (FBR) has explained the meaning of ‘taxable activity’ under the Sales Tax Act, 1990 for tax year 2027, outlining the economic activities that fall within the scope of the sales tax law.

According to the Sales Tax Act, 1990, updated up to June 30, 2026, *“taxable activity* ” means any economic activity carried on by a person, whether or not it is conducted for profit.

The definition includes an activity carried on in the form of a business, trade or manufacture.

It also covers an activity involving the supply of goods or the rendering or provision of services, or both, to another person.

A one-off adventure or concern in the nature of a trade is also treated as a taxable activity under the law.

Furthermore, anything done or undertaken during the commencement or termination of an economic activity falls within the definition.

*Activities excluded from taxable activity*
The FBR has also specified activities that do not constitute taxable activity.

These include services provided by an employee to an employer in the capacity of an employee.

An activity carried on by an individual as a private recreational pursuit or hobby is also excluded.

Similarly, an activity conducted by a person other than an individual is excluded if it would qualify as a private recreational pursuit or hobby had it been carried out by an individual.

*What is ‘tax fraction’?*
The Sales Tax Act also defines ‘tax fraction’ as an amount calculated according to the formula:
*a / (100 + a)*
Here, ‘a’ represents the rate of tax specified in Section 3 of the Sales Tax Act.

*The definitions form part of the sales tax framework applicable for tax year 2027 under the FBR’s updated Sales Tax Act, 1990, which incorporates amendments and updates made up to June 30, 2026.*

24/08/2026

*FBR defines ‘supply’ under Sales Tax Act for tax year 2027*
Federal Board of Revenue (FBR) has explained the meaning of ‘ *supply* ’ under the Sales Tax Act, 1990 for tax year 2027, outlining the transactions covered by the term for sales tax purposes.

According to the Sales Tax Act, 1990, updated up to June 30, 2026, “supply” means a sale or other transfer of the right to dispose of goods as owner. This also includes a sale or transfer made under a hire purchase agreement.

The law further specifies several transactions that fall within the definition of supply.

*Transactions treated as supply*
The definition includes the private, business or non-business use of goods produced or manufactured during a taxable activity where the goods are used for purposes other than making a taxable supply.

The term also covers the auction or disposal of goods to satisfy a debt owed by a person.

Another transaction treated as a supply is the possession of taxable goods held immediately before a person ceases to be a registered person under the sales tax law.

In cases where goods are manufactured for another person, the transfer or delivery of those goods to their owner, or to a person nominated by the owner, is also included in the definition of supply.

*FBR empowered to specify other transactions*
The law further empowers the FBR, with the approval of the Federal Minister-in-charge, to specify through a notification published in the official Gazette other transactions that will or will not constitute a supply.

The definition is important for taxpayers because determining whether a transaction constitutes a supply helps establish when sales tax obligations may arise under the Sales Tax Act, 1990.

*The provision is contained in the FBR’s updated Sales Tax Act, which incorporates amendments and updates made up to June 30, 2026, and provides the applicable legal framework for tax year 2027.*

22/08/2026

The Finance Act 2026 requires banks and electronic money institutions to share details of transactions above Rs. 10 million with the Federal Board of Revenue through its central data hub.

Using automated data matching, FBR will be able to compare major financial activity with available tax and banking information. Significant differences between declared income and recorded transactions may lead to additional review.

The step is aimed at increasing the use of digital systems in tax administration and improving oversight of high-value financial activity.

22/08/2026

21/08/2026

📢 *FBR Clarifies “Active Taxpayer” Status for Tax Year 2027*

The updated *Sales Tax Act, 1990* explains the compliance requirements for maintaining *Active Taxpayer Status (ATL)*.

*A registered person may lose active status if:*

🔹 Sales tax registration is blocked or suspended under *Section 21*
🔹 Sales tax return *u/s 26* is not filed for *two consecutive tax periods*
🔹 Income tax return *u/s 114* or statement *u/s 115* is not filed within the prescribed due date
🔹 Quarterly or annual withholding tax statement *u/s 165* is not submitted within the prescribed time

📌 *Key Point*
Active taxpayer status under the sales tax regime is linked with *Sales Tax, Income Tax and Withholding Tax compliance*.

✅ Registered persons should ensure timely filing of all applicable returns and statements to avoid losing active taxpayer status for *Tax Year 2027*