Sohail & CO. Certified Public Accountant/ Tax Practitioner

07/03/2026

🚨 𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐔𝐩𝐝𝐚𝐭𝐞 𝐟𝐨𝐫 𝐒𝐚𝐥𝐞𝐬 𝐓𝐚𝐱𝐩𝐚𝐲𝐞𝐫𝐬

𝐓𝐡𝐞 𝐅𝐞𝐝𝐞𝐫𝐚𝐥 𝐁𝐨𝐚𝐫𝐝 𝐨𝐟 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 (𝐅𝐁𝐑) 𝐡𝐚𝐬 𝐢𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐞𝐝 𝐚 𝐮𝐬𝐞𝐟𝐮𝐥 𝐟𝐚𝐜𝐢𝐥𝐢𝐭𝐲 𝐢𝐧 𝐭𝐡𝐞 𝐦𝐨𝐧𝐭𝐡𝐥𝐲 𝐬𝐚𝐥𝐞𝐬 𝐭𝐚𝐱 𝐫𝐞𝐭𝐮𝐫𝐧 𝐚𝐥𝐥𝐨𝐰𝐢𝐧𝐠 𝐭𝐚𝐱𝐩𝐚𝐲𝐞𝐫𝐬 𝐭𝐨 𝐚𝐝𝐣𝐮𝐬𝐭 𝐢𝐧𝐚𝐝𝐦𝐢𝐬𝐬𝐢𝐛𝐥𝐞 𝐢𝐧𝐩𝐮𝐭 𝐭𝐚𝐱 𝐨𝐟 𝐩𝐫𝐞𝐯𝐢𝐨𝐮𝐬 𝐦𝐨𝐧𝐭𝐡𝐬.
This step will help businesses regularize past discrepancies where input tax may have been incorrectly claimed, particularly in situations such as:
🔹 𝐈𝐧𝐩𝐮𝐭 𝐭𝐚𝐱 𝐫𝐞𝐥𝐚𝐭𝐞𝐝 𝐭𝐨 𝐞𝐱𝐞𝐦𝐩𝐭 𝐬𝐮𝐩𝐩𝐥𝐢𝐞𝐬

Let me explain it in simple terms.
1️⃣ 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐈𝐧𝐚𝐝𝐦𝐢𝐬𝐬𝐢𝐛𝐥𝐞 𝐈𝐧𝐩𝐮𝐭 𝐓𝐚𝐱?
In sales tax, businesses can claim input tax (tax paid on purchases) against output tax (tax charged on sales).
However, some input tax cannot legally be claimed. This is called inadmissible input tax.
𝐂𝐨𝐦𝐦𝐨𝐧 𝐞𝐱𝐚𝐦𝐩𝐥𝐞𝐬:
Input tax related to exempt supplies
Personal or non-business expenses

2️⃣ 𝐖𝐡𝐚𝐭 𝐏𝐫𝐨𝐛𝐥𝐞𝐦 𝐄𝐱𝐢𝐬𝐭𝐞𝐝 𝐁𝐞𝐟𝐨𝐫𝐞
Earlier, if a taxpayer mistakenly claimed extra input tax in previous months, it was difficult to correct it because:
Past returns were locked
Adjustment options were limited
This created compliance issues during audits.
3️⃣ 𝐖𝐡𝐚𝐭 𝐅𝐁𝐑 𝐇𝐚𝐬 𝐀𝐥𝐥𝐨𝐰𝐞𝐝 𝐍𝐨𝐰
Now FBR allows taxpayers to adjust inadmissible input tax of previous months in the current sales tax return.
This means you can:
✔ Reduce wrongly claimed input tax
✔ Adjust input tax related to exempt supplies
✔ Correct excess input tax claims made earlier
4️⃣ 𝐒𝐢𝐦𝐩𝐥𝐞 𝐄𝐱𝐚𝐦𝐩𝐥𝐞
Suppose:
January purchase input tax claimed = Rs. 100,000
Later you realize Rs. 30,000 relates to exempt supplies (not allowed)
Previously: difficult to fix.
𝐍𝐨𝐰:
In March return, you can adjust Rs. 30,000 as inadmissible input tax.
5️⃣ 𝐖𝐡𝐲 𝐅𝐁𝐑 𝐈𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐞𝐝 𝐓𝐡𝐢𝐬
Purpose is to:
Improve voluntary compliance
Allow self-correction
Reduce future penalties and audit issues
Make sales tax reporting transparent
Further Clarifications are required from FBR.

02/03/2026

24/02/2026

Despite years of VAT implementation in the UAE, many businesses still face penalties due to basic compliance errors.

Here are the most common issues we observe:
1. 𝐈𝐧𝐜𝐨𝐫𝐫𝐞𝐜𝐭 𝐕𝐀𝐓 𝐈𝐧𝐯𝐨𝐢𝐜𝐢𝐧𝐠
Missing mandatory details such as TRN, invoice date, or proper VAT breakdown.

2. 𝐄𝐫𝐫𝐨𝐫𝐬 𝐢𝐧 𝐕𝐀𝐓 𝐑𝐞𝐭𝐮𝐫𝐧 𝐑𝐞𝐩𝐨𝐫𝐭𝐢𝐧𝐠
Mismatch between accounting records and VAT return submissions.

3. 𝐈𝐧𝐜𝐨𝐫𝐫𝐞𝐜𝐭 𝐕𝐀𝐓 𝐓𝐫𝐞𝐚𝐭𝐦𝐞𝐧𝐭
Failing to charge VAT where applicable or misclassifying zero-rated and exempt supplies.

4. 𝐖𝐞𝐚𝐤 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 & 𝐑𝐞𝐜𝐨𝐫𝐝 𝐊𝐞𝐞𝐩𝐢𝐧𝐠
Failure to maintain supporting documents as required by the FTA.

5. 𝐌𝐢𝐬𝐬𝐢𝐧𝐠 𝐅𝐢𝐥𝐢𝐧𝐠 & 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐃𝐞𝐚𝐝𝐥𝐢𝐧𝐞𝐬
Late submissions result in avoidable administrative penalties.

VAT compliance is not just about filing — it requires proper system controls, technical understanding, and periodic review.

Businesses that treat VAT as a routine task often expose themselves to financial risk.

If your VAT process has not been reviewed recently, it may be time to reassess.

24/02/2026

The Islamabad High Court held that recovery proceedings under section 140 of the Income Tax Ordinance, 2001 cannot be initiated unless a fresh notice of demand under section 138(1) is first issued after the appellate order. The Court emphasized that the statutory scheme requires a clear sequence: determination of liability, issuance of demand notice, and only then recovery in case of non-compliance. Skipping this mandatory step violates due process and constitutional guarantees under Articles 4 and 10-A. Consequently, the impugned recovery proceedings were declared illegal and without lawful authority, and the respondents were directed to refund the illegally recovered amount forthwith.*

Whole Order (Verbatim)

IN THE ISLAMABAD HIGH COURT, ISLAMABAD
W.P No. /2023

Telenor Pakistan (Private) Limited, 345 Telenor Headquarters, Plot No. 55 River View Avenue, Block B, Gulberg Greens, Islamabad through its Manager Legal Affairs, Mr. Taimoor Mateen Khan
Petitioner

Versus

1. Assistant Commissioner Inland Revenue, Unit-XX, Range-I, Zone-IV,Large Taxpayers', Islamabad, 20 Khayaban e Suhrawardy Service Road South, G-9Mauve Area,G-9/1,Islamabad

2. Assistant/Deputy Commissioner Inland Revenue, Audit-II, Unit-XI, Range-IV,Large Taxpayers', Islamabad,20 Khayaban e Suhrawardy Service Road South,G-9 Mauve Area, G-9/1, Islamabad

3. Commissioner Inland Revenue, Zone-IV, Large Taxpayers', Islamabad, 20Khayaban e Suhrawardy Service Road South, G-9 Mauve Area, G-9/1, Islamabad

4. Chief Commissioner Inland Revenue, Large Taxpayers Office, Islamabad, 20Khayaban e Suhrawardy Service Road South, G-9 Mauve Area, G-9/1, Islamabad

5. Commissioner Inland Revenue (Appeals-I), Large Taxpayers Office, Islamabad
Federation of Pakistan for the purpose of Service through Chairman Federal Board of Revenue, Islamabad
Respondents

PEETITION UNDER ARTICLE 199 OF THE CONSTITUTION OF ISLAMIC REPUBLIC OF PAKISTAN 1973, AS AMENDED UPTO DATE
Respectfully Sheweth

1. That the addresses of the parties for the purpose of services are the same as given in the heading of the Petition.

2. That the Petitioner in this case is a Limited Company providing telecommunication services in Pakistan, AJK & GB.

3. That the order u/s 161 of Ordinance, 2001 was passed by Respondent No.2 on August 30, 2022 against which appeal was filed by Petitioner before Respondent No.5. Copy of order passed u/s 161 of Ordinance, 2001 is attached as annexure D.

4. Recovery notice u/s 138(1) of Income Tax Ordinance, 2001 (Ordinance, 2001)was issued by Respondent No. 1 on April 5, 2023 for the recovery of impugned tax demand created vide order passed u/s 161 of Ordinance, 2001 for tax year 2017. Copy of recovery notice is attached as annexure E.

Form No.HCJD/C-1
JUDGMENT SHEET.
IN THE ISLAMABAD HIGH COURT,
ISLAMABAD

W.P No.2164 of 2023
Zhongxing Telecom Pakistan (private) Limited
Versus
Deputy Commissioner Inland Revenue, Islamabad, etc.

W.P No.2423 of 2023
Telenor Pakistan (Private) Limited
Vs.
Assistant Commissioner, Inland Revenue, Islamabad, etc.

W.P No.1751 of 2023
Telenor Pakistan (Private) Limited
Vs.
Assistant Commissioner Inland Revenue, Islamabad, etc.

Petitioners by: M/s Uzair Bin Shafie and Syed Farid Ahmed Bukhari, Advocates in their respective petitions.

Respondents by: Syed Muhammad Abbas and Hassan Ali Advocates.

Date of Decision: 28.01.2026

KHADIM HUSSAIN SOOMRO, I:- Through this single judgment, the instant petition, along with W.P. No. 1751-2023 and W.P. No. 2423-2023,is being decided, as all the petitions involve a common question of law and arise out of the same controversy.

2. Through the instant Constitutional Petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, as well as Writ Petition No.1751 of 2023 and Writ Petition No.2423 of 2023, the petitioners, inter alia, seek a declaration that the recovery proceedings initiated by Respondent No.1 under Section 140 of the Income Tax Ordinance,2001 (the ordinance, 2001), without issuing a fresh notice to the petitioners under 3 FEB 206tion 138(1) of the Ordinance, 2001, following the confirmation of th Articles 4, 8, 10A, 18, 23, 25, and 77 of the Constitution of the Islamic Republic of Pakistan, 1973. It was further submitted that these proceedings also violate the provisions of the Income Tax Ordinance, 2001, and the Income Tax Rules, 2002. It was contended that the demand raised under Section 122(1) of the Ordinance, 2001 is illegal and unwarranted, and that the petitioner possesses a strong prima facie case before ATIR, where a favorable decision is expected in light of the ordinance and relevant case law. It was further contended that it is settled law that recovery proceedings cannot be initiated until the petitioner has been heard by a forum outside the departmental hierarchy. In the present case, the petitioner's appeal before ATIR has not been decided, and therefore, the recovery proceedings following the dismissal of the appeal by Respondent No.6 are illegal and wholly unjustified. He placed reliance on cases reported as PLD 2020 LHR 632,2016 PTD 2406 (IHC), 2003 PTD 1746 (H.C. Lahore), 2006 PTD 535 (H.C.Lahore), and (2009) 100 Tax 344 (H.C. Lahore). It was argued that the Honorable Court, in W.P. No.2622/2022 titled M/s Pakistan LNG Limited vs. Federation of Pakistan, has clarified that no recovery under Section 140of the Ordinance, 2001 can be initiated without complying with the mandatory requirements of Section 138(1) of the Ordinance. Learned counsel submitted that no notice under Section 138(1) was issued to the petitioner after the assessment order was confirmed by Respondent No.6,nor was any intimation given for the payment of the tax demand. Therefore, the recovery proceedings initiated by Respondent No.1 are illegal, and the petitioner is entitled to a refund of Rs. 145,226,847/-. Finally, it was submitted that the petitioner is a law-abiding taxpayer, and after the conclusion of the appeal, any confirmed demand will be paid to the 13FEB 202Government Treasury. Meanwhile, the attachment of the petitioner's bank 12accounts for recovery of Rs. 145,226,847/- has severely affected its Islamabad Hi operational and financial activities, including its cash flow. It was

the Constitution, the High Court may exercise its constitutional jurisdiction only if no other adequate remedy is available under the law. An aggrieved person must first exhaust any such remedy before approaching the High Court, irrespective of whether it is convenient for him. Reliance was placed on the judgments reported in (2021 CLC 1748) and (PLD 2014 Lahore 92).

6. We have heard the arguments of learned counsel for the parties and perused the record with their able assistance.

7. The pivotal question requiring determination in the present set of petitions is whether the respondents could lawfully invoke the coercive recovery mechanism under Section 140 of the Income Tax Ordinance, 2001, without first issuing a notice of demand in terms of Section 138(1) of the Ordinance after the appellate order had been passed. The statutory scheme of the ordinance clearly reflects a sequential and structured mechanism: first, a determination of liability; second, the issuance of a notice of demand; and third, in the event of non-compliance, the initiation of recovery proceedings. This sequence is not merely procedural in nature but is rooted in the principles of due process and fair treatment guaranteed under the Constitution.

8. Section 138(1) of the Ordinance contemplates that a taxpayer must be afforded a reasonable time to discharge the tax liability after the issuance of a notice of demand. The expression "reasonable time" cannot be rendered redundant or illusory by immediate recourse to coercive measures. The legislative intent behind this provision is twofold: firstly, to place the taxpayer on notice regarding the crystallized liability; and secondly, to afford the taxpayer an opportunity to either discharge the liability or avail the statutory remedies provided under the law.

9. The constitutional dimension of this statutory requirement cannot be overlooked. Article 4 of the Constitution guarantees that every citizen shall be dealt with in accordance with law, while Article 10-A enshrines the

instant writ petitions are allowed impugned recovery proceedings, therefore, suffer from a patent jurisdictional defect and are declared to be illegal and without lawful authority. The respondents are directed to reimburse the illegal recovery forthwith after receipt of this order.
Before the issuance of notice u/s 140 a fresh notice u/s 138(1) is required to be issued after the appellate order.

21/02/2026

*The Appellate Tribunal Inland Revenue, Islamabad held that although the taxpayer filed withholding tax statements late, the tax amount involved was duly deposited. The Tribunal observed that imposing a heavy penalty of Rs. 502,500 against a minor default of Rs. 13,315 was disproportionate and unjustified. It was further held that penalty provisions cannot be used as a tool for revenue generation and must be applied judiciously. Since the tax had already been deposited and the default related only to late filing, the Tribunal reduced the penalty to the minimum amount of Rs. 5,000 and modified the orders passed by the lower authorities accordingly. The appeal was partly allowed and the stay application was disposed of as infructuous.*

_

*Whole Order (Verbatim)*

THE APPELLATE TRIBUNAL INLAND REVENUE OF PAKISTAN DIVISION BENCH-III,ISLAMABAD

---

ITA No.92/IB/2026
MA (Stay) No.166/1B/2026
(Tax Year, 2024)

Raja Abdullah Mukhtar.
Paharay.
Kotla, Tehsil Kharian,
Gujrat.
CNIC:3420227926543...Appellant

Versus

The Commissioner-IR,
RTO,Sialkot ...Respondent

Appellant by : Mr.Zahid Shafiq, Adv/AR
Respondent by : Mr. Muhammad Awais, Adv/ DR
Date of Hearing : 06-02-2026
Date of Order : 06-02-2026

ORDER

MUHAMMAD NAEEM ASHRAF (MEMBER):-The titled appeal is filed against an order passed by the learned Commissioner Inland Revenue (Appeals), Sialkot (CIR-A) vide bar Code No. I00000266986305 dated 31.12.2025 whereby penalty order under section 182(I) of the Income Tax Ordinance 2001 (the Ordinance) passed by the Assessing Officer (AO) was confirmed.

2. Facts of the case as per appeal papers are that penal proceedings were initiated against the taxpayer u/s 182(1) of the Ordinance for non-filing of WHT statements u/s 165 of the Ordinance for the months of January to March 2024 (3rd Quarter) for TY 2024. The reply furnished was considered unsatisfactory. Consequently, proceedings were concluded and penalty was imposed for the3^Quarter under Serial no. IA (Rs.462,500/-) and 15 (Rs.40,000/-) of the Table provided in section 182(1) of the Ordinance for Rs.502,500/-. The taxpayer filed appeal before the learned CIR-A who confirmed the order of the A.O., hence2nd Appeal has been preferred before this Tribunal on grounds as per memo of appeal.

3. On the date of hearing, Mr. Zahid Shafiq, Advocate, appeared on behaif of the Appellant-Taxpayer as Authorized Representative (AR) whereas Mr. Muhammad Awais, appeared on behalf of the Respondent-Department as Departmental Representative (DR). They argued the case from respective perspectives. Rival arguments heard. Impugned orders examined. The Appeal filed is decided as under.

4. During the course of proceedings, the AR submitted that an order u/s 161/205of the Ordinance was passed for TY 2024 whereby WHT default of Rs. 13,315/-was determined which had been deposited (Copy of CPR produced). While admitting that WHT statements were filed late after receipt of notices, the AR argued that levy of penalty of RS. 502,500/- against a default of Rs. 13,315/- was not justified. The argument of AR carries weight. The AO had imposed penalties for each quarter of default through separate orders totaling Rs.2,467,500/-, which is disproportionate with the amount of default i.e. Rs.13,315/-. It is further noted that the AO confronted the taxpayer on the penalties under Serial no. IA and 15 of Table provided u/s 182(1) of the Ordinance which prescribe penalties for different degrees of default Serial no.15prescribe penalty where tax collected/deducted is not deposited. In case of taxpayer WHT default of Rs.13,315/- has been deposited. As such there was no cause for levy of penalty of Rs.40,000/- which is deleted. The issue in hand is slightly different than the one envisaged in serial. No. IA ibid. In the instant case, WHT statement was filed late but tax due deposited in light of order u/s 161/205 of the Ordinance. This situation is not covered in Serial no.IA. Penalty is not a revenue nor penal provision could be used for revenue generation. In the instant case default for non-filing of WHT is established but tax due is deposited. Therefore, only minimum penalty could be imposed. Non filing of WHT statements was contested before the AO on the basis of jurisdiction, which was rejected. The authorities below have imposed penalties in a mechanical manner without application of judicious mind which is not justifiable. Thus, in peculiar circumstances of the case, where default is established and tax due deposited in compliance with order u/s

161/205 of the Ordinance, we consider it appropriate to reduce penalty to Rs. 5,000/-being the minimum penalty envisaged under serial.no. IA ibid.

6. The orders passed by the authorities below are modified accordingly. The appeal filed by the taxpayer is disposed of in the manner and to the extent discussed above.

7. The appellant also filed application for grant of stay against order passed u/s 182 of the Ordinance. Since the main appeal is decided as above, the stay application has become infructuous and is accordingly disposed of.

8. This order consist of three (03) pages and each page bears my signature.

21/02/2026

*The Appellate Tribunal Inland Revenue, Islamabad held that in the case of a cement distributor, turnover for the purpose of minimum tax under section 113 does not mean gross sales.*
*The Tribunal ruled that only the distributor’s margin or commission can be treated as turnover, as gross receipts are merely pass-through amounts belonging to the principal manufacturers.*
*Applying minimum tax on total sales was declared a misapplication of law.*
*The order passed under section 122(5A) was set aside, the tax demand was deleted, and the appeal was allowed.*

--

*Whole Order (Verbatim)*

*APPELLATE TRIBUNAL INLAND REVENUE*
*(DIVISION BENCH-II), ISLAMABAD*

ITA No.610/IB/2025
MA(Stay) No.157/IB/2026
(Tax Year,2024)

Mr.Tahir Rafaqat,Rawalpindi Road, Fatah Jang,Registration No.3710212317303...
The CIR, RTO, Rawalpindi.Versus

Respondent by : Mr.Zulqarnain Awan, Advocate
Date of Hearing : 04.02.2026
Date of Order : 04.02.2026

ORDER

Nasir Iqbal (Member):-Through the present appeal, the taxpayer, engaged in the business of distribution of cement on behalf of various cement companies, has impugned the order dated 25.11.2025 passed under section 122(5A) by the learned Additional Commissioner, whereby the deemed assessment was amended on the premise that it was erroneous in so far as it was prejudicial to the interest of revenue.

Briefly stated, the facts of the case are that the taxpayer, an individual engaged in the business of distribution of cement on behalf of various manufacturers to retailers, filed his return of income for the tax year 2024declaring a turnover of Rs. 2.243 billion. The said return was deemed to have been assessed under the legal fiction embodied in section 120 of the Income Tax Ordinance, 2001. Subsequently, the learned Additional Commissioner examined the return and formed a prima facie view that the deemed assessment was erroneous in so far as it was prejudicial to the interest of revenue,on the ground that the turnover declared by the taxpayer was liable

to minimum tax under section 113 at the rate of 1.5%, which, according to the department, had not been correctly computed. It was thus tentatively concluded that the taxpayer had failed to discharge his turnover tax liability in accordance with law, thereby causing financial prejudice to the exchequer and rendering the assessment legally unsustainable.

3. Consequently, jurisdiction under section 122(5A) was assumed and a show-cause notice was issued to the taxpayer, confronting him with the proposed application of section 113 and the intention to subject the entire gross receipts to minimum tax at the rate of 1.5%. The taxpayer duly participated in the proceedings and contended that, being a distributor of cement, he was entitled to the benefit of clause 24D of Part Il of the Second Schedule to the Income Tax Ordinance, 2001, whereby a reduced rate of minimum tax at 0.25% was prescribed for compliant distributors. It was further asserted that the taxpayer was a regular filer of income tax and sales tax returns and had duly furnished withholding statements within the prescribed time, thereby fulfilling the statutory conditions for availing the reduced rate.

4. The department required the taxpayer to substantiate his status as a distributor through documentary evidence, whereupon the taxpayer furnished certificates issued by Best way Cement Company and Fauji Cement Company Limited confirming that he was an authorized dealer/distributor of cement for specified districts. The learned officer found this evidence to be satisfactory for establishing the taxpayer's distributorship and claim under clause 24D of Part II of the Second Schedule. However, he did not accept the contention advanced on behalf of the taxpayer that, for the purposes of minimum tax under section 113, the turnover of a distributor should be confined to the distributor's margin or commission rather than the entire gross sales. Proceeding on this premise, the learned Additional Commissioner subjected the entire declared turnover of Rs. 2.243 billion to minimum tax at the reduced rate of 0.25% under clause 24D of Part Il of the Second Schedule and, through the impugned order daed 25.11.2025created a tax liability amounting to Rs. 5.6 million.

Aggrieved by the aforesaid adverse fiscal adjudication, the taxpayer has assaied the same in appeal before this forum by exercising the option providea in the proviso to subsection (1) of section 127 of the Income Tax Ordinance,2001, which confers a statutory right upon an aggrieved person to prefer an appeal directly before the Appellate Tribunal. The said proviso reads as under:

"Provided that an aggrieved person under sub-section (1) may have the option to either file appeal before Commissioner Inland Revenue (Appeals) directly or may surrender his right of appeal before Commissioner Inland Revenue (Appeals) and avail the next statutory appellate forum by filing the appeal directly before the Appellate Tribunal Inland Revenue"

6. In exercise of the aforesaid statutory entitlement, the taxpayer has approached this Tribunal seeking annulment of the impugned order on legal as well as factual grounds. The case was fixed for hearing wherein both the learned Authorised Representative of the taxpayer and the learned Departmental Representative appeared and were heard at length. At the very outset, both the learned AR and the DR, in unison, fairly conceded that the foundational facts giving rise to the present controversy are largely undisputed. It was not in dispute that the taxpayer was operating as a distributor of cement companies, a status which stood duly acknowledged by the department on the basis of documentary evidence placed on record. Likewise, it was also not disputed that, being a distributor, the taxpayer was entitled to the benefit of the reduced rate of minimum tax under section 113as provided through clause 24D of Part Il of the Second Schedule to the Income Tax Ordinance, 2001, whereby the incidence of minimum tax stood restricted to 0.25%. Indeed, the impugned order itself proceeds on the acknowledgment of this legal entitlement.

According to the learned Authorised Representative, the only controversy requiring adjudication before this Tribunal pertains to the correct conception of "turnover" for the purposes of levy of minimum tax under section 113, as read with clause 24D of Part II of the Second Schedule. It was contended that in the case of a distributor, the turnover relevant for minimum tax cannot be equated with the gross value of sales made on behalf of the principal manufacturers; rather, it must be confined to the distributor's own margin or commission embedded in such transactions.

8. It was further argued that the issue at hand stands conclusively settled through authoritative pronouncements of the superior courts, wherein it has repeatedly been held that for distributors or commission agents, the turnover liable to minimum tax is confined to the commission or margin earned and not the aggregate value of goods sold on behalf of the principal.

9. Upon careful consideration of the rival submissions advanced by the learned representatives of the parties, perusal of the available record, and examination of the statutory framework governing the controversy, we find that the lis before us lies within a narrow compass.

10. The Lahore Hight Court has authoritatively settled this proposition by in ITA No.377/2015 (Commissioner Vs Allied Marketing) holding that,in the case of commission agents and distributors operating on margin-based arrangements, the turnover relevant for minimum tax is confined to the commission or margin actually earned and not the aggregate value of goods supplied on behalf of the principal.

11. Viewed thus, we hold that for the purposes of minimum tax under section 113 read with the concessional regime provided through clause 24D of Part Il of the Second Schedule, the turnover of a distributor is to be construed as the distributor's margin or commission and not the gross value of supplies made on behalf of the principal manufacturers.

12. Consequently, the appeal filed by the taxpayer succeeds. The order passed under section 122(5A) dated 25 November 2025 is hereby set aside, and the demand created on account of minimum tax computed on gross turnover is deleted. The department is directed to re-compute, if so required, the taxpayer's liability strictly in accordance with law by confining the incidence of minimum tax to the distributor's margin eligible for the concessional rate under clause 24D of Part Il of the Second Schedule.The main apreal having thus been decided, the stay application becomes inconsequential and is disposed of as such. We order accordingly.
*Minimum tax is 0.25% for distributors.*

21/02/2026

*SECP Approves Full Digitization of Share Ownership for Unlisted Companies to Enhance Transparency and Investor Protection*

*The Securities and Exchange Commission of Pakistan (SECP) has initiated the second phase of reforms to fully digitize share ownership of unlisted companies by transitioning from physical share certificates to electronic (book-entry) form through the Central Depository System (CDS), operated by the Central Depository Company (CDC).*

*The move will eliminate risks associated with paper certificates, enable faster and more secure share transfers, and improve transparency of ownership records.*

20/02/2026

*Is Your Business Ready? FBR's Real-Time Integration Mandate Is Now Law.*

*FBR's SRO 288(I)/2026: Pakistan Enters the Age of Real-Time Tax Compliance*
Pakistan's tax administration just crossed a threshold it cannot walk back from.

On the surface, SRO 288(I)/2026 — issued by the Federal Board of Revenue in early 2026 — looks like another technical amendment to the Income Tax Rules, 2002. But read carefully, and it becomes clear: this is a structural rewiring of how Pakistan monitors commercial activity, collects revenue, and enforces compliance.

Every qualifying business. Every transaction. Reported to the FBR. In real time.

*The Legal Foundation*

SRO 288(I)/2026 derives its authority from Section 237 of the Income Tax Ordinance, 2001, which empowers the Federal Government to make rules for the purposes of the Ordinance. The notification formally amends the Income Tax Rules, 2002, inserting provisions that mandate electronic integration of business systems with the FBR's centralized digital infrastructure.

*This sits alongside an already-established framework:*

Section 114A, Income Tax Ordinance, 2001 — governs registration and filing obligations
Section 182 — prescribes penalties for non-compliance with FBR directives
Rule 43A, Income Tax Rules, 2002 (as amended) — the specific rule now requiring real-time POS/e-invoicing integration
SRO 1125(I)/2011 (Sales Tax) — the earlier tier-1 retailer integration mandate that laid the groundwork for this expansion

*_-"The FBR's pivot to real-time data is not regulatory overreach — it is regulatory catch-up. Every major tax authority in the world is moving in this direction."_* — Tax Reform Perspective, 2025 Revenue Sector Review

*What the Law Now Requires*

Under the amended rules, businesses in scope must:

✦ Integrate their Point of Sale (POS) or electronic invoicing system with FBR's centralized portal
✦ Transmit every transaction in real time — no offline batching, no delays
✦ Register each outlet, branch, and billing terminal with the FBR before going live
✦ Use only FBR-approved software for billing and invoicing
✦ Maintain uninterrupted connectivity — system downtime does not excuse non-reporting

No supply of goods. No provision of services. Outside the integrated system.

*Who Is Covered: The Full Sector Breakdown*

The scope of SRO 288(I)/2026 is deliberately broad. Here is who falls within the mandate:

*🏪 Retail & Distribution* Manufacturer-cum-retailers, wholesaler-cum-retailers, importer-cum-retailers, chain stores, and mall-based outlets meeting prescribed turnover or size thresholds.

Practical Example: A clothing brand operating five outlets across Lahore, Karachi, and Islamabad must integrate each POS terminal individually, register all five locations with the FBR, and ensure every sale — whether cash, card, or digital wallet — is reported instantly.

*🏥 Healthcare & Allied Medical Services* Hospitals, medical centers, diagnostic laboratories (X-ray, CT, MRI), dentists, physiotherapists, surgeons, veterinary practitioners, and allied health professionals.

Practical Example: A private diagnostic center in Gulberg charging Rs. 8,000 for an MRI must issue an FBR-integrated invoice for every patient — and that transaction must hit the FBR system before the patient walks out the door.

*🎓 Education* Private schools, colleges, universities, and professional or vocational training institutes.

Practical Example: A private university collecting tuition fees of Rs. 150,000 per semester per student must integrate its fee management system with FBR infrastructure. Every fee challan issued becomes a reportable transaction.

*🍽️ Hospitality & Personal Services* Restaurants, cafes, guest houses, motels, hostels, marriage halls, beauty parlors, personal care clinics, and slimming and wellness centers.

Practical Example: A marriage hall booking a function for Rs. 500,000 must issue an integrated invoice at the time of booking and again at settlement. Both are reportable events under the notification.

*🚚 Logistics & Courier* Inter-city transport operators and courier and cargo service providers.

Practical Example: A courier company processing 1,000 shipments per day across Pakistan must ensure its dispatch and billing software generates FBR-compliant electronic invoices for each consignment.

*🏋️ Recreation & Clubs* Gyms, fitness centers, health clubs, swimming pools, and civilian and institutional clubs.

Practical Example: A gym charging monthly memberships must register its billing system and ensure that membership renewals, personal training packages, and walk-in fees are all captured within the integrated framework.

*💼 Professional & Financial Services* Chartered accountants, cost accountants, photographers, event managers, exchange companies, and foreign currency dealers.

Practical Example: A chartered accountancy firm issuing monthly retainer invoices to corporate clients must now route those invoices through an FBR-integrated system — bringing professional service billings fully into the documented economy.

*The Penalties for Non-Compliance*

This is not a soft deadline. The Income Tax Ordinance, 2001 and the amended rules provide for a range of enforcement actions:

Non-Compliance Consequence Failure to integrate within prescribed timeline Monetary penalty under Section 182Transactions conducted outside integrated system Disallowance of related expenses Non-registration of outlets/terminals Audit proceedings and possible suspension Persistent non-compliance Blocking of CNIC/NTN-linked services and banking facilities

*_"The era of plausible deniability in tax reporting is over. When the data flows directly to the authority, there is no version of the records left to negotiate."_*

*The Global Context: Pakistan Is Not Alone*

Real-time e-invoicing mandates have been implemented or are being phased in across:

🇮🇳 India — GST e-invoicing mandatory for businesses above INR 5 crore turnover
🇧🇷 Brazil — Nota Fiscal Eletrônica (NF-e) system operational since 2008
🇲🇽 Mexico — CFDI digital invoice mandate covers virtually all commercial transactions
🇸🇦 Saudi Arabia — ZATCA e-invoicing (Fatoorah) rolled out in phases since 2021
🇪🇺 European Union — Moving toward mandatory B2B e-invoicing across member states by 2028

Pakistan's SRO 288(I)/2026 places it squarely within this global trajectory. The direction of travel is clear, and it is irreversible.

*What Compliant Businesses Actually Gain*

The compliance cost is real. But so are the long-term advantages:

✔ Reduced audit vulnerability — digitally verified records leave little room for arbitrary assessments
✔ Improved banking credibility — clean, documented revenue history strengthens loan and credit applications
✔ Investor confidence — businesses with transparent financials attract partners more readily
✔ Internal discipline — real-time reporting forces reconciliation, exposing leakages and inefficiencies
✔ Litigation reduction — disputes with FBR drop significantly when transactional records are system-generated and timestamped

*_"Compliance is not the cost of doing business. Opacity is — you just pay it in a different currency."_*

*Your Practical Compliance Checklist*

If your business falls within the scope of SRO 288(I)/2026, here is where to start:

*Step 1 — Confirm your category.* Review the notification against your business structure and revenue streams. When in doubt, seek a formal opinion.

*Step 2 — Audit your existing systems.* Identify whether your current POS, billing, or ERP software is FBR-approved or can be integrated with an approved solution.

*Step 3 — Register your outlets.* Every branch, outlet, and billing terminal must be individually registered with the FBR before integration goes live.

*Step 4 — Engage an approved vendor.* A list of FBR-approved POS and e-invoicing solution providers is available through the FBR portal. Select a vendor with proven integration experience.

*Step 5 — Train your staff.* Front-line staff must understand the system. Human error at the point of sale is a compliance risk.

*Step 6 — Establish a monitoring protocol.* Assign internal responsibility for connectivity oversight, error reporting, and periodic compliance review.

*The Bottom Line*

SRO 288(I)/2026 is the clearest signal yet that Pakistan's tax administration is moving from a declaration-based model — where businesses self-report and the FBR audits selectively — toward a data-driven model where the FBR knows what you earned before you file anything.

For businesses that have operated transparently, this is an opportunity to be recognized for it. For those who have not, the window to self-correct is narrowing.

The system is watching. And now, it is watching in real time.

This article is prepared for informational purposes only and does not constitute legal or tax advice. Statutory references are based on legislation current as of the date of publication. Readers are encouraged to consult a qualified tax or legal professional for advice specific to their circumstances.