The Federal Board of Revenue (FBR) is entering the enforcement phase of its electronic invoicing initiative and is preparing to impose significant penalties on businesses that have failed to integrate their systems with the tax authority’s digital platform.
According to official sources, the penalty regime will take effect from January 2025, following the expiry of all notified deadlines for system integration. The move marks a decisive shift from facilitation to strict compliance, as the FBR seeks full implementation of electronic sales tax invoicing across the country.
Earlier, the tax authority had granted multiple extensions through SRO 1852(I)/2025, allowing different categories of taxpayers additional time to complete registration and connect their internal systems with the FBR’s computerized infrastructure. Public listed companies and importers were required to complete their sales tax registration by October 15, 2025. They were then given until October 25 to test their systems and were expected to begin issuing electronic sales tax invoices from November 1, 2025.
Large businesses reporting sales tax turnover exceeding Rs1 billion during the preceding 12 months were subject to the same compliance timeline. These entities were expected to ensure timely registration, complete system testing, and transition fully to electronic invoicing within the prescribed period.
Importers were also required to follow the same schedule, with mandatory registration by mid-October and electronic invoicing starting in early November after successful system testing.
Smaller businesses, with turnover of up to Rs100 million over the last 12 months, were provided a slightly extended timeframe. These taxpayers were required to register by November 15, complete testing by November 25, and commence electronic invoicing from December 1, 2025.
For other categories of registered persons, the final registration deadline was December 10, 2025. They were required to complete system testing by December 25 and start issuing electronic invoices no later than December 31, 2025.
Under the notified rules, all designated sales tax registrants were instructed to integrate their hardware and software with the FBR’s system through PRAL or a licensed integrator approved by the Board. With the deadlines now behind them, businesses that failed to comply are likely to face enforcement action, including heavy financial penalties.
The initiative is part of the FBR’s broader strategy to digitize tax administration, improve documentation of the economy, and enhance transparency in sales tax collection. Companies that have not yet completed system integration may now find themselves exposed to serious regulatory and financial consequences.