The Federal Board of Revenue (FBR) has introduced important clarifications regarding the collection and assessment of sales tax on certain goods covered under Serial No. 65 of the Third Schedule to the Sales Tax Act, 1990.
The clarification was issued through Sales Tax General Order No. 19 of 2026, with the aim of removing uncertainty and ensuring that the relevant sales tax provisions are applied consistently.
How will sales tax be calculated?
Under the revised mechanism, different valuation rules will apply depending on whether the goods are supplied locally or imported.
For locally manufactured goods, sales tax will be calculated on the value of supply as defined under Section 2(46) of the Sales Tax Act.
For imported goods, the calculation is different. The taxable value will be taken at 130% of the value determined under Section 25 of the Customs Act, 1969. This customs-based value will also include applicable customs duties and Federal Excise Duty.
For example, if the relevant customs value, including applicable duties and FED, comes to Rs. 1 million, the sales-tax value under this mechanism would be Rs. 1.3 million. The applicable sales tax rate would then be applied to that amount.
Who will be covered?
The revised framework applies to several categories of manufacturers, importers and retailers.
These include footwear manufacturers selling through their own FBR digitally integrated and POS-compliant retail outlets. It also covers importers supplying registered manufacturers or digitally integrated and POS-compliant retailers.
Retailers that directly import covered goods for sale to final consumers are also included within the revised framework.
In addition, the provisions apply when digitally integrated manufacturers or registered importers supply goods to corporate organizations, government departments, autonomous bodies and statutory bodies purchasing those goods for their own use.
Manufacturers that exclusively supply their products to FBR digitally integrated and POS-compliant retailers are also covered.
Why has FBR issued the clarification?
According to the FBR, the corrigendum has been issued to eliminate ambiguity surrounding the valuation and collection of sales tax under Serial No. 65.
The tax authority has also replaced the previous Annexure-A attached to the earlier general order with a revised annexure. The new annexure will serve as the basis for determining the levy, assessment and collection of sales tax on the relevant supplies.
Effective from July 1, 2026
One of the key aspects of the notification is its effective date. The revised provisions will apply retrospectively from July 1, 2026.
However, the FBR has clarified that all other provisions of the earlier Sales Tax General Order will continue to remain in force.
What does this mean for businesses?
The clarification is particularly important for businesses involved in the manufacturing, importing and retailing of goods falling under Serial No. 65.
Importers will need to pay particular attention to the revised valuation mechanism because the taxable value for imports is now linked to 130% of the customs-determined value after accounting for applicable duties and FED.
Manufacturers and retailers covered by the order should also review their invoicing, tax calculations and POS integration arrangements to ensure compliance with the revised requirements.
Overall, the FBR’s latest clarification is intended to establish a more consistent sales-tax mechanism and remove uncertainty over how covered transactions should be valued and taxed.