The FBR can now adjust the input tax adjustment ratio based on taxpayers’ compliance with digital invoicing, POS and other electronic systems. ISLAMABAD: The Federal Board of Revenue (FBR) has been empowered to increase or reduce the ratio of input tax adjustment for sales tax during Tax Year 2027, depending on taxpayers’ compliance with the Board’s digital and electronic systems. The FBR issued Circular No. 1 of 2026 explaining major amendments to the Sales Tax Act, 1990 introduced through the Finance Act, 2026. According to the circular, an amendment to Section 8B of the Sales Tax Act, 1990 empowers the Board to reduce or enhance the ratio of input tax adjustment based on taxpayers’ compliance or non-compliance with its digital and electronic systems. Digital compliance linked to tax adjustment The amended provision covers a range of systems used by the FBR for digital integration and monitoring of economic activity. These include production monitoring systems, digital invoicing, e-bility, point-of-sale (POS) systems and other electronic systems used for the digital integration of data. Under the revised framework, the extent to which a taxpayer can adjust input tax will therefore be linked to their…