FBR clarifies that the term covers tax, additional tax, default surcharge, penalties and certain other amounts payable under the sales tax law.

ISLAMABAD: The 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.