FBR outlines the types of sales tax, excise duty and provincial tax that may qualify as input tax for registered persons.

ISLAMABAD: The Federal Board of Revenue (FBR) has explained the meaning of ‘input tax’ for tax year 2027 under Pakistan’s sales tax law, setting out the different taxes that may qualify for a registered person.

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

According to the updated law, “input tax” means:

• tax levied under the Sales Tax Act, 1990, on the supply of goods to the registered person;

• tax levied under the Sales Tax Act, 1990, on the import of goods by the registered person;

• in relation to goods or services acquired by the person, tax levied under the Federal Excise Act, 2005, in sales tax mode as a duty of excise on the manufacture or production of goods, or the rendering or provision of services;

• provincial sales tax levied on services rendered or provided to the person, excluding services specified by the FBR through a notification in the official Gazette, subject to the conditions, restrictions and limitations prescribed in that notification; and

• tax levied under the Sales Tax Act, 1990, as adapted in the State of Azad Jammu and Kashmir, on the supply of goods received by the person.

The definition sets out the different forms of tax that can constitute input tax for a registered person. These include sales tax paid on purchases and imports, certain Federal Excise Duty charged in sales tax mode, and applicable provincial sales tax on services.

The provision is contained in the FBR’s updated Sales Tax Act, 1990, incorporating amendments up to June 30, 2026, and forms part of the legal framework applicable for tax year 2027.