Pakistan’s Federal Board of Revenue (FBR) has made sales tax invoicing compulsory for registered taxpayers receiving advance payments against future supplies of goods and services. The new requirement aims to improve tax compliance, strengthen transaction transparency and ensure timely reporting of tax liabilities.

Under procedures introduced through SRO 2063 of 2026, businesses must issue sales tax invoices and report output tax in the tax return for the period in which an advance payment is received.

For payments made in instalments, a separate invoice must be generated for each instalment, with invoices electronically linked to maintain a clear transaction record. Once the actual supply takes place, the final invoice must reference the earlier advance payments.

The rules also clarify that sales tax already reported on advance payments cannot be charged again on the final invoice. The applicable tax rate will be determined based on the date the advance is received, while any outstanding balance will be taxed at the rate applicable on the date of supply.

The updated procedures also provide mechanisms for adjustments in cases involving refunds, cancellations and changes in transaction value. The move is expected to strengthen Pakistan's sales tax administration and improve accountability among registered businesses.