SRO 2063(I)/2026

FBR has introduced a clear rule for sales tax on advance payments. Under SRO 2063(I)/2026, a registered person who receives an advance against a future supply must now issue an "advance receipt invoice" for each payment received, and must declare the output tax on that amount in the return for the period in which the payment is received — not later when the goods are actually supplied. Every advance payment gets its own invoice, and each new advance invoice is linked to the earlier ones for the same supply. When the supply is finally made, the seller issues a final sales tax invoice that references all the advance receipt invoices already issued. The tax already paid on the advances is not charged a second time — only the balance, if any, is accounted for. One important point: the sales tax rate applied to each advance is the rate in force on the date that advance is received. So if the rate changes between the advance and the final supply, each payment keeps the rate that applied when it came in. In short, tax on advances is now payable up front, invoice-by-invoice, instead of being deferred to the delivery stage. Businesses that take booking amounts, deposits or milestone payments must update their invoicing and return workflow accordingly.