Islamabad, September 6, 2025 – The Federal Board of Revenue (FBR) has clarified the limitation period for tax assessment procedures under the Sales Tax Act, 1990, applicable for the tax year 2025-26.
The updated provisions were introduced through the Finance Act, 2025 and incorporated into the Act to bring greater consistency and accountability in tax administration.
According to Section 11G, the law establishes a clear timeframe within which officers must complete assessment actions. A show-cause notice under Sections 11D to 11F must be issued within five years from the end of the financial year in which the relevant date falls. Once issued, an order under these sections must be passed within 180 days, with the possibility of a written extension granted by the Commissioner. However, such an extension cannot exceed 90 additional days.
The law further provides exclusions in calculating the limitation period. Time lost due to adjournments from stay orders, Alternative Dispute Resolution proceedings, or taxpayer-requested delays (not exceeding 60 days) will not count toward the specified limit. This ensures both taxpayers and officials are given a fair chance to present their case while maintaining procedural discipline.
For clarity, the Act defines “relevant date” for assessment purposes as: the time of payment of sales tax under Section 6, the payment date for goods or services subject to withholding under Section 3(7), or the date of an erroneous refund.
By outlining strict limitation rules, the government aims to reduce uncertainty in tax disputes and streamline the assessment process, reinforcing transparency and fairness in 2025-26.
Disclaimer: This article is intended for informational purposes only and should not be taken as legal or tax advice.