FBR says goods moved between a factory and its own warehouse under the same STRN are not taxable supplies and do not require digital invoices.
ISLAMABAD: The Federal Board of Revenue (FBR) has relaxed documentation requirements for the movement of goods from a factory to a warehouse owned by the same registered person, clarifying that such transfers do not constitute taxable supplies where both premises operate under the same Sales Tax Registration Number (STRN).
The FBR issued Sales Tax General Order (STGO) No. 25 of 2026, titled “Movement of Goods from Factory to Registered Person’s Own Warehouse — Non-Applicability of Digital Invoicing and Prescribed Documentation”, setting out the procedure for such inter-premises movement.
Under the order, the transfer of goods from a factory to the registered person’s own warehouse does not constitute a “supply” where both premises operate under the same STRN. Consequently, businesses are not required to issue a digital invoice or e-invoice for such transfers.
However, businesses must document the movement through a prescribed non-fiscal Stock Transfer Note, provided in Annexure-A of the order.
FBR clarifies tax treatment of stock transfers
The FBR explained that the definition of “supply” under Section 2(33) of the Sales Tax Act, 1990, requires a sale or another transfer of the right to dispose of goods as owner.
Where goods are moved between a factory and warehouse belonging to the same registered person, ownership remains unchanged and no consideration is involved. The movement therefore falls outside the sales tax charge under Section 3 of the Sales Tax Act.
As a result, the requirement under Section 23 to issue a tax invoice does not arise. The provisions of Chapter XIV of the Sales Tax Rules, 2006, concerning the transmission of tax invoices for taxable supplies through a licensed integrator or PRAL, are also not applicable.
Separate STRN changes tax treatment
The FBR clarified that a different treatment applies where the receiving warehouse has a separate STRN.
In such cases, the movement takes place between two distinct registered persons and is treated as a taxable supply. Digital invoicing through a licensed integrator or PRAL becomes mandatory, with output tax chargeable in the normal manner.
The Stock Transfer Note procedure cannot be used as a substitute for a tax invoice where the receiving premises have a separate STRN.
Stock Transfer Note required for qualifying movements
For movements covered by the order, the dispatching unit must generate a sequentially numbered Stock Transfer Note before the goods are dispatched.
The document must contain the prescribed particulars and clearly carry the endorsement “Stock Transfer — Not a Taxable Supply.”
The value of the goods may be recorded at cost for inventory-control purposes. However, the document must not be styled or numbered in a manner resembling a tax invoice.
The Stock Transfer Note must accompany the consignment throughout its journey and be produced when demanded at a check-post or during verification.
After receiving the goods, the warehouse in-charge must acknowledge the consignment on the Stock Transfer Note and update the warehouse stock register. The dispatching unit must likewise update its factory stock register maintained under Rule 22.
Copies of the Stock Transfer Note must be retained at both locations and reconciled monthly against production and inventory records. The FBR said the records must be preserved for six years in accordance with Section 24 of the Sales Tax Act.
FBR bars unnecessary documentation during transit checks
The order directs field formations not to treat the production of a Stock Transfer Note instead of a tax invoice as evidence of non-compliance where the dispatching and receiving premises share the same STRN.
However, consignments moving without either a digital invoice or the prescribed Stock Transfer Note will be treated as prima facie undocumented and proceeded against under the applicable provisions of the law.
The FBR has also issued instructions to field formations aimed at preventing unnecessary disruption during transit checks.
Officials have been directed not to demand a driver’s Computerised National Identity Card (CNIC) or any other document beyond the digital invoice or, for qualifying inter-premises movements, the prescribed Stock Transfer Note.
The FBR further directed that vehicles carrying goods without a digital invoice should not be diverted to, taken to or detained at unauthorised premises.
Goods in transit should not ordinarily be subjected to physical checking, examination or unloading.
Limited exception for Third Schedule goods
The non-issuance of a digital invoice is to be dealt with separately under the relevant provisions of the Sales Tax Act and rules. It should not, by itself, constitute grounds for detaining the vehicle or goods in transit.
An exception applies to goods specified in the Third Schedule to the Sales Tax Act. Such goods may be checked solely to verify whether the prescribed retail price has been printed or embossed on them under Section 3(2)(a) of the Act.
Appropriate action may be taken where the prescribed requirements have not been met.
The FBR warned that harassment of taxpayers in any form is unacceptable and that any departure from the instructions will be viewed seriously.
The order was issued with the approval of the competent authority.