FBR Explains 2025–26 Sales Tax Credit Restrictions for Businesses and Individuals

• FBR clarifies restrictions on sales tax credit for 2025-26 due to amendments in the Sales Tax Act, 1990.
• Section 8 outlines rules where registered persons cannot reclaim input tax.
• Credit is only for legitimate transactions related to taxable supplies to prevent fraud and revenue loss.
• Input tax cannot be reclaimed if goods or services are for non-taxable purposes or personal use.
• Credit is denied if the supplier fails to deposit tax or declare the transaction.
• Discrepancies in CREST or unverifiable input tax through the supply chain disallow credit.
• Fake invoices or purchases from undocumented sources are not eligible for credit.
• Credit is disallowed for goods attached to immovable property unless for resale or manufacturing.
• Restrictions apply to vehicles, equipment, and furniture not meant for resale.
• For mixed supplies, only input tax for taxable supplies can be claimed.
• Additional restrictions on agricultural machinery taxed at 7% and supplies to unregistered distributors.
• No credit for goods from suppliers who do not report sales in returns.
• No credit for those who paid fixed tax before December 1, 1998.
• Restrictions aim to ensure only genuine taxpayers with proper documentation benefit from tax credits.

Source: pkrevenue.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---