ISLAMABAD: The Federal Board of Revenue (FBR) has prescribed a procedure for sales tax-registered taxpayers for the issuance of advance receipt invoices to account for advance payments received against supplies.
The FBR has issued SRO 2063(I)/2026 to amend the Sales Tax Rules, 2006.
According to the new procedure, where a registered person, or a class of persons to whom section 23 of the Sales Tax Act, 1990 applies, receives an advance payment, whether in full or in part or through one or more instalments, against a supply, the registered person shall, at the time of receipt of each such payment, issue an advance receipt invoice containing the particulars specified in section 23 of the Act, to the extent applicable, and account for and declare the output tax payable thereon in the return for the tax period in which the advance payment is received.
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Such advance receipt invoices shall be treated as tax invoices for the purposes of sections 7 and 8 of the Act.
Where more than one advance payment is received against the same supply, a separate advance receipt invoice shall be issued in respect of each payment. Every subsequent advance receipt invoice shall be electronically linked, in the prescribed manner, with the preceding advance receipt invoice or invoices, as the case may be, to maintain complete traceability of all advance payments relating to that supply.
When the supply is subsequently made against the advance payment or payments referred to above, a final sales tax invoice shall be issued with reference to the relevant advance receipt invoice or invoices issued under the relevant sub-rule.
The value and sales tax already accounted for against such advance receipt invoice or invoices shall not be accounted for again. Sales tax, if any, on the remaining value of the supply shall be calculated only on the value not previously accounted for against the advance payment or payments.
The rate of sales tax applicable to each advance payment shall be the rate applicable at the time the advance payment is received, whereas the rate applicable to the remaining value of the supply shall be the rate applicable at the time of supply in accordance with the Act.
Where, after issuance of an advance receipt invoice, the amount of the advance payment or the value of the underlying supply is increased, reduced or refunded, or otherwise requires adjustment, or where the supply is cancelled wholly or partly, the corresponding adjustment shall be made in accordance with section 9 of the Act and the procedure prescribed under rules 19 to 22.
Every advance receipt invoice, debit note or credit note issued in relation thereto, and the final sales tax invoice issued under the relevant sub-rule, shall be electronically linked and maintained in the manner prescribed under these rules or as specified by the Board under section 23 of the Act to ensure identification, cross-referencing and complete traceability of the transaction, the FBR added.
Copyright Business Recorder, 2026
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