Pakistan sets the terms for its tax credit on FBR system integration

Pakistan sets the terms for its tax credit on FBR system integration

26 October 2026: Pakistan's Federal Board of Revenue has issued the rule that decides who can claim the income tax credit for connecting to its systems. New Rule 33U of the Income Tax Rules 2002, notified on 26 October as S.R.O. 1904(I)/2026, allows the section 64D credit only for equipment and software used exclusively for an integration the law requires, and only with an activation record generated or confirmed by the FBR's own system. A day later the FBR published a draft that would make every company file its financial statements through IRIS in a machine-readable format from tax year 2026.

Not yet independently verified. Both notifications were read as scanned PDFs on the FBR site. The rate and ceiling of the section 64D credit are set in the Ordinance and are not restated in the rule, and the gazette date of the rule 73 draft, which starts its seven-day comment period, was not stated. We will update this when it can be confirmed, and remove this note.

Who can claim the integration credit

Section 64D of the Income Tax Ordinance gives a credit for the amount invested in integrating with the FBR's computerised system. The rule, which finalises a draft published on 6 October, sets five conditions that must all be met:

• the person must be required by the Income Tax Ordinance, the Sales Tax Act 1990 or the Federal Excise Act 2005 to integrate, for real-time production monitoring or for recording or reporting sales or receipts in that tax year;
• the equipment or software must be bought, installed and successfully integrated and configured with the FBR's system during that year;
• it must be used directly and exclusively for the required integration;
• the integration must be evidenced by an integration, activation, commissioning or configuration record generated or confirmed by the FBR's system, naming the taxpayer, the resource and the activation date;
• the claim must be backed by an invoice, bill, agreement or licence and evidence of payment or liability.

What counts as the amount invested

The rule counts the purchase price plus one-time costs directly needed to bring the resource into use for the integration: installation, configuration, interface development, integration, testing and implementation. Discounts, rebates, refunds, grants and subsidies are deducted.

It excludes refundable or adjustable tax and duty, operation and maintenance, annual maintenance and post-commissioning support, recurring service charges, internet, telecom and utility charges, staff salaries, training, consumables and financing costs. A general-purpose system qualifies only for a separately identifiable component dedicated to the integration.

The credit is claimed in the return for the year the resource goes live, once only, with a schedule in IRIS listing the resource, the vendor, the invoice reference, the dates, the amount and the integration or resource identification number. Commissioners can verify it against the records the taxpayer keeps under section 174.

What this means for integrators and their customers

For software vendors and integrators selling POS, invoicing or production-monitoring links to the FBR, the rule sets out the paperwork their customers will need. Invoices that separate the one-time integration work from subscription, support and hardware that serves other purposes will be easier to claim against, and the FBR activation record becomes the document that proves the date.

Machine-readable accounts through IRIS

The second notification, S.R.O. 1912(I)/2026 of 27 October, is a draft. It would add sub-rule (2F) to rule 73 so that, for tax year 2026 onwards, a company's financial statements accompanying its return are filed through IRIS "only in an electronically readable file format", conforming to a data scheme, taxonomy, file structure, field mapping and validation rules the FBR will publish, with different taxonomies allowed for different reporting frameworks. It would also make digital signature or another secure authentication linked to the filer's credentials the way IRIS filings are verified, with an electronic acknowledgement as proof of filing.

Comments are due within seven days of the draft's publication in the official Gazette. No taxonomy has been published yet. A third draft of 26 October, S.R.O. 1905(I)/2026, proposes a Faceless Assessment Unit for best-judgement and amended assessments, with replies through the taxpayer's IRIS account. These follow the FBR's order on video analytics for spinning units.

Sources

• FBR: S.R.O. 1904(I)/2026, insertion of rule 33U in Chapter VIIA of the Income Tax Rules, 2002, 26 October 2026
• FBR: S.R.O. 1912(I)/2026, draft amendments to rule 73 of the Income Tax Rules, 2002, 27 October 2026
• FBR: S.R.O. 1905(I)/2026, draft amendments to Chapter XX of the Income Tax Rules, 2002, 26 October 2026