FBR Sales Tax Split From Income Tax Announced
The FBR sales tax split has separated the administration of sales tax and Federal Excise Duty from income tax, in a major shake-up of the tax system. The board has created a new post of Member, Sales Tax and FED (Technical), and posted 54 Inland Revenue officers to the new wing.
Dr Muhammad Sarmad Qureshi, a Grade 21 officer of the Inland Revenue Service, has been appointed to head the new wing. The 54 officers moved on Friday range from BS-17 to BS-21. ProPakistani reported the move, citing an official notification.
How the FBR sales tax split will roll out
Under the phased plan, separate sales tax units will start working in Large Taxpayer Units and Corporate Tax Offices from December 1, 2026, at first under the supervision of the commissioners concerned.
From January 1, 2027, separate sales tax units will become operational in Regional Tax Offices. The final step comes on March 1, 2027, when separate Chief Commissioners for Sales Tax will be appointed.
The aim is to give sales tax and FED their own structure, with dedicated officers, field formations and separate sales tax zones across the country.
What changes for taxpayers
For now, income tax stays where it is. The board has not yet notified a post of Member, Income Tax (Technical). Income tax matters will therefore continue to be handled by the Member Inland Revenue (Operations) and the existing income tax setup.
The FBR’s Board-in-Council has approved the new Member post, and the board’s organisational structure has been revised under its new reporting system. The change is administrative, but it is a large one. Sales tax and FED will now have their own chain of command, from the member at headquarters down to the field formations.
Why the FBR is restructuring
Until now, the Inland Revenue Service handled both direct and indirect taxes under one roof. One set of officers dealt with income tax returns and audits, and the same service also collected sales tax and FED. The split ends that arrangement.
The move comes as the board tries to lift collection and tighten control. The FBR missed its tax collection target by Rs94bn earlier this year, and it has been under pressure to raise revenue. It has also ordered electronic monitoring of the tea trade from December 10, as part of a wider enforcement drive.
A separate sales tax wing should, in theory, give the tax closer attention. Sales tax is collected at each stage of production and sale, and it needs its own audit and enforcement work. A dedicated team can focus on refunds, input tax claims and evasion in a way that a combined setup may not.
The test will be in the rollout. The December start in large taxpayer and corporate offices covers the biggest firms first, where the revenue is concentrated. The January extension to regional offices will show whether the model works beyond the big cities. The March appointment of separate chief commissioners will complete the new structure.
Taxpayers will watch whether the split makes refunds and audits faster, and whether it adds a new layer of notices from two separate wings instead of one. The board says the aim is a cleaner structure, but businesses will judge it by the experience.
Weekly inflation has eased to 11.21pc as fuel prices fell, which gives households some relief, and the KSE-100 index gained 500 points on Friday to close at 177,874. Pakistan also recorded a third straight first-quarter budget surplus, a sign that the revenue effort is starting to show in the accounts.
Frequently asked questions
What has the FBR separated?
The FBR has separated the administration of sales tax and Federal Excise Duty from income tax, creating a new wing headed by a Member, Sales Tax and FED (Technical).
Who heads the new sales tax wing?
Dr Muhammad Sarmad Qureshi, a Grade 21 officer of the Inland Revenue Service, has been appointed Member Sales Tax and FED.
When do the changes take effect?
Separate sales tax units start in Large Taxpayer Units and Corporate Tax Offices on December 1, 2026, in Regional Tax Offices on January 1, 2027, and separate Chief Commissioners for Sales Tax take charge on March 1, 2027.
What happens to income tax?
Income tax stays with the existing setup under the Member Inland Revenue (Operations), as no Member, Income Tax (Technical) post has been notified yet.
How many officers have moved to the new wing?
The FBR has transferred and posted 54 Inland Revenue officers, from BS-17 to BS-21, to the new sales tax wing.
