Sales tax invoices mandatory on advance payments

Islamabad: The Federal Board of Revenue (FBR) has introduced mandatory sales tax invoices for registered taxpayers receiving advance payments for future supplies. According to SRO2063 of 2026, taxpayers must declare the output tax in the return for the tax period when the payments are obtained. If multiple advance payments are received for a single supply, each payment requires a separate invoice.

These invoices must be electronically linked together to ensure full transaction traceability. Upon making the actual supply, taxpayers will issue a final sales tax invoice, referencing the earlier advance payment invoices. The value and sales tax on advance payments will not be counted again; instead, sales tax is only applied to the remaining supply value.

The invoice must include the details as per Section 23 of the Act. Taxpayers must also account for and declare the output sales tax on the advance payment in the return for the tax period when the payment is received. Advance payments are taxed at the rate at the time of receipt, while any remaining amount is taxed at the rate at the time of the actual supply.

The amended rules also allow for adjustments if advance payments or supply values change, or if supplies are canceled partially or fully. These adjustments follow Section 9 of the Sales Tax Act and Rules 19 to 22. The notification mandates taxpayers to maintain all advance payment invoices, debit and credit notes, and final sales invoices electronically, ensuring complete traceability of each transaction.