The Federal Board of Revenue (FBR) has issued salient features explaining major changes in sales tax laws through the Finance Bill, 2026.
The proposed budgetary measures pertaining to sales tax for FY 2026–27 are as follows:
1. Relief Measures
i. Grant of exemption from sales tax on magazines.
ii. Extension of the exemption on the import of CKD kits for electric vehicles until 30 June 2027.
iii. Expansion of the scope of exemption on aircraft parts imported or leased by M/s PIACL.
iv. Withdrawal of the sales tax exemption on family planning devices.
v. Abolition of the tampon tax.
vi. Exemption from sales tax to promote strategic investment in the shipping sector.
vii. Exemption from sales tax on strategic imports for the SCO Summit and counter-terrorism efforts.
viii. Exemption from sales tax on the import of capital goods for the upgradation and overhaul of existing refineries.
ix. Addition of a new serial number in the Sixth Schedule.
x. Extension of the sunset clause for electric vehicles until 30 June 2027.
2. Revenue Measures
i. Expansion of the Third Schedule to ensure payment of sales tax at the consumer price by manufacturers at the manufacturing stage.
ii. Withholding of sales tax by toll manufacturers from unregistered buyers.
iii. Expansion of the scope of withholding sales tax by Associations of Persons (AOPs) and individuals from unregistered persons.
iv. Imposition and recovery of 3% VAT from manufacturers where imported raw materials are sold in the same state.
v. Rationalisation of penalties for certain offences and inclusion of three additional offences in Section 33 for the imposition of penalties.
3. Streamlining Measures
i. Insertion of definitions for advance receipt invoice, algorithmic settlement mechanism, electronic invoicing system, National Faceless Centre, and production monitoring system.
ii. Streamlining of the definition of Tier-1 retailers, including retailers with an annual turnover of Rs. 200 million or more within the category of Tier-1 retailers.
iii. Insertion of an explanation to clarify the time of delivery of goods to the recipient.
iv. Granting powers to the Board to outsource the valuation of goods.
v. Addition of a new proviso in Section 6 to impose tax on the steel sector based on monthly electricity units consumed.
vi. Addition of a new proviso in Section 8B to enhance or reduce the limit for input tax adjustment.
vii. Insertion of a proviso in Section 9 to allow adjustments through the electronic issuance of debit and credit notes.
viii. Insertion of new Section 11H relating to faceless audit and assessment.
ix. Substitution of sub-section (2) of Section 21 to discourage fake or flying invoices and fraudulent activities.
x. Substitution of sub-section (1) of Section 23 to provide for the issuance of invoices against exempt supplies as well.
xi. Insertion of new sub-section (8A) in Section 25 to provide for audits by Chartered Accountants or Cost and Management Accountants.
xii. Insertion of Section 30AA relating to faceless jurisdiction.
xiii. Insertion of Section 30DDDB for the establishment of the Directorate General (Field Compliance) under Inland Revenue.
xiv. Insertion of new Section 32C for the establishment of the National Faceless Centre.
xv. Substitution of sub-sections (2) and (3) of Section 40C relating to the production monitoring system and video analytics.
xvi. Addition of new sub-section (6) in Section 40C providing for the seizure and confiscation of goods without affixed tax stamps, stickers, or similar markings.
xvii. Insertion of new Section 40F relating to the auction of confiscated goods.
xviii. Insertion of Section 45C establishing a faceless appeal procedure.
xix. Insertion of Section 47AA relating to the Algorithmic Settlement Mechanism.
xx. Insertion of Section 47AAA establishing an Independent Case Scrutiny Committee.
xxi. Addition of new sub-section (3) in Section 56B for maintaining a centralised directory.
xxii. Addition of a proviso under the Twelfth Schedule to restrict the sale of imported goods in the same state.