The Federal Board of Revenue (FBR) has revised how sales tax is valued on specified footwear supplies, replacing the annexure of an earlier order and applying the change retrospectively from July 1, 2026.

Sales Tax General Order (STGO) No. 19 of 2026, dated August 20, is a corrigendum to STGO No. 11 of 2026, issued on July 17, 2026. It withdraws and replaces Annexure-A of the earlier order, which governs the levy, assessment and collection of sales tax on supplies falling under Serial No. 65 of the Third Schedule to the Sales Tax Act, 1990, a category covering footwear of all types. All other provisions of STGO No. 11 of 2026 remain in force.

Two valuation bases for local and imported footwear

For local supplies made by a manufacturer, sales tax is charged on the value of supply as defined under Section 2(46) of the Sales Tax Act, 1990.

For imported goods, sales tax is assessed and collected on a value equal to 130% of the value determined under Section 25 of the Customs Act, 1969, inclusive of applicable customs duties and Federal Excise Duty (FED).

The corrigendum also provides that the relevant retailer will pay tax on the retail value of the goods, provided both supplier and retailer are digitally integrated with the FBR, are POS-compliant and issue digital tax invoices for the transactions.

The five categories of manufacturers, importers and retailers covered

  • Footwear supplied by registered manufacturers through their own FBR digitally integrated and POS-compliant retail outlets;
  • Supplies by importers to registered manufacturers or FBR digitally integrated and POS-compliant retailers;
  • Goods imported directly by FBR digitally integrated and POS-compliant retailers for subsequent supply to end consumers;
  • Supplies by digitally integrated registered manufacturers or registered importers to registered corporate entities, federal or provincial government departments, autonomous bodies or statutory bodies as end consumers for their own use;
  • Supplies by a registered taxpayer manufacturing exclusively for an FBR digitally integrated and POS-compliant retailer.

Why the corrigendum was issued

The FBR said the order removes ambiguity and ensures uniform implementation after Serial No. 65 was inserted into the Third Schedule through the Finance Act, 2026. The Pakistan Footwear Manufacturers Association had raised implementation and interpretational concerns. The board observed that supplies made through documented, electronically verifiable supply chains have readily ascertainable value under the law, and that footwear manufacturers supplying independent brand owners do not determine the ultimate retail price.

Steps for covered businesses

  • Review the revised Annexure-A to STGO No. 11 of 2026 to confirm which supplies fall within the five categories.
  • Align sales tax charging, assessment and reporting practices with the updated valuation rules.
  • Ensure FBR digital integration and POS compliance, and issue digital tax invoices for covered transactions.

Covered manufacturers, importers and retailers should compare current invoicing and valuation practices against the revised Annexure-A and confirm FBR digital integration and POS compliance ahead of their next sales tax filing.

The retrieved reports do not state the sales tax rate applied to footwear, reproduce the full text of the revised Annexure-A, or explain how the FBR will verify digital integration and POS compliance; these details remain unspecified in the evidence reviewed.