To ensure timely liquidity and uninterrupted supply of essential medicines, the Federal Board of Revenue (FBR) has introduced sector-specific sales tax refund rules for the pharmaceutical industry under the Sales Tax Rules, 2006 (updated for 2026).
These rules, covered under Rules 39H to 39N, establish a fast-track, risk-based, and automated refund mechanism for eligible pharmaceutical businesses.
🧪 Rule 39H – Who Is Eligible for Pharma Refunds?
These special refund rules apply to registered persons who are:
✔ Engaged in import or supply of zero-rated drugs
✔ Registered under the Drugs Act, 1976
✔ Supplying medicaments classified under Chapter 30 of the First Schedule to the Customs Act, 1969
❌ Excluding PCT heading 3005.0000
📅 Applicable to refund claims for tax periods starting January 15, 2022 onwards.
💸 Rule 39I – Maximum Refund Amount Allowed
The refundable amount is restricted to the lower of the following:
• Actual input tax consumed in zero-rated pharmaceutical supplies
• A refund ceiling determined by FBR, based on:
o Percentage of supply value, or
o Amount per unit of quantity
👉 This ensures refunds reflect genuine tax incidence.
📝 Rule 39J – Filing & Processing of Refund Claims
• Monthly National Sales Tax Return (STR-7) acts as the refund claim
• Refund amount declared in Column 29 is considered claimed
• No separate refund application or electronic data is required
📎 Annex-H Submission Timeline
• Return may be filed without Annex-H
• Annex-H must be submitted within 120 days
• Commissioner may grant a 60-day extension upon written request
📌 The date of Annex-H submission is treated as the filing date of the refund claim.
⚙ Rule 39K – Risk-Based Processing via RMS
All refund claims are first assessed through the Risk Management System (RMS):
✅ Low-risk claims → processed through FASTER PHARMA
⚠ Higher-risk claims → routed to STARR (Chapter V)
🚀 Rule 39L – FASTER PHARMA Module (72-Hour Refunds)
Refunds processed under FASTER PHARMA are:
✔ Fully automated and system-verified
✔ Based on RMS quality checks of input consumption
✔ Paid within 72 hours of claim submission
Refund Payment Orders (RPOs) are sent electronically to the State Bank of Pakistan for direct bank credit.
🔄 Rule 39M – STARR Module for Partial or Blocked Claims
• Non-verified portions undergo weekly system validation
• RPOs are generated for amounts cleared in each cycle
• Claimants receive system-generated objections and updates
• After 8 validation checks, unresolved amounts are processed under STARR
📂 Rule 39N – Post-Refund Scrutiny & Compliance
• Supporting documents are required only if demanded
• Approval of the Commissioner is mandatory for document requests
• Chapter V rules apply regarding inadmissible claims and claimant responsibility
✅ Key Takeaway for Pharmaceutical Businesses
The 2026 pharma-specific refund regime emphasizes automation, speed, and risk-based scrutiny. Pharmaceutical companies that file accurate STR-7 returns, timely Annex-H, and compliant supply records can expect refunds within days instead of months.
Disclaimer: This article is provided for general informational purposes only and does not constitute tax, legal, or professional advice. Sales tax laws and refund procedures are subject to amendments and interpretation by the Federal Board of Revenue (FBR). Pharmaceutical businesses are advised to review relevant FBR notifications or consult a qualified tax professional before filing refund claims.