By Abdul Ghani

The Federal Board of Revenue (FBR) has revised the sales tax framework for footwear and other supplies covered under Serial No. 65 of the Third Schedule to the Sales Tax Act, 1990, setting a 130% valuation basis for imported goods.

According to a corrigendum issued by the FBR’s Inland Revenue Policy Wing, a copy of which is available with Wealth Pakistan, the revised rules have been introduced to remove ambiguity and ensure uniform implementation of the sales tax provisions relating to Serial No. 65 of the Third Schedule.

The FBR has withdrawn the existing Annexure-A attached to Sales Tax General Order No. 11 of 2026 and replaced it with a revised annexure. The new Annexure-A will govern the levy, assessment, and collection of sales tax on supplies falling within the scope of Serial No. 65.

Under the revised mechanism, sales of footwear by registered manufacturers through their own FBR digitally integrated and POS-compliant retail outlets have been specifically included.

The framework also covers supplies made by importers to registered manufacturers or FBR digitally integrated and POS-compliant retailers, as well as goods imported directly by digitally integrated and POS-compliant retailers for subsequent sale to end consumers.

The revised rules further cover supplies by digitally integrated registered manufacturers or registered importers to registered corporate entities, federal or provincial government departments, autonomous bodies and statutory bodies for their own use.

For local supplies by manufacturers, sales tax will be charged on the value of supply as defined in Section 2(46) of the Sales Tax Act, 1990.

However, for imports of goods covered under Serial No. 65, sales tax will be assessed and collected on a value equal to 130% of the value determined under Section 25 of the Customs Act, 1969, inclusive of applicable customs duties and Federal Excise Duty.

The FBR has also stipulated that the relevant retailer will pay tax on the retail value of the goods. The arrangement is subject to both the supplier and retailer being digitally integrated with the FBR and POS-compliant, with digital tax invoices issued for the transactions.

The corrigendum will take effect retrospectively from July 1, 2026, and will be read together with Sales Tax General Order No. 11 of 2026 dated July 17, 2026.

The FBR has clarified that all provisions of the earlier General Order not modified through the corrigendum will remain unchanged and continue to have full force and effect.

Credit: INP-WealthPk