FBR outlines the taxes covered by ‘output tax’, a key component in determining a registered person’s sales tax liability.

ISLAMABAD: The Federal Board of Revenue (FBR) has explained the term “output tax” under the Sales Tax Act, 1990 for Tax Year 2027 to help registered taxpayers understand their sales tax obligations.

The FBR has issued the Sales Tax Act, 1990, updated up to June 30, 2026, which defines “output tax” in relation to a registered person.

According to the law, “output tax” means the tax applicable to a registered person under the following categories:

Sales tax on supply of goods

Output tax includes the tax levied under the Sales Tax Act, 1990, on a supply of goods made by the registered person.

This covers the sales tax that a registered person is required to charge on taxable supplies made in the course of business.

Federal Excise Duty in sales tax mode

The definition also includes tax levied under the Federal Excise Act, 2005, in sales tax mode as a duty of excise.

This applies to the manufacture or production of goods, as well as the rendering or provision of services, by the registered person.

Sales tax on services in Islamabad

Output tax further includes sales tax levied on services rendered or provided by the registered person under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001.

Therefore, under the Sales Tax Act, output tax broadly represents the relevant tax liability arising from taxable supplies of goods and specified services made by a registered person.

The definition is important for registered taxpayers because output tax forms a key component in determining their sales tax liability after adjustment of eligible input tax.