FBR Makes System Integration Mandatory for Distributors and Retailers Exceeding These Withholding Tax Limit

The Federal Board of Revenue (FBR) has made it mandatory for distributors and retailers to integrate their businesses with the FBR’s digital system if their monthly deductible withholding tax exceeds Rs. 100,000 and Rs. 500,000, respectively. The directive was issued through SRO 2071(I)/2025, released in Islamabad on Tuesday. The FBR specified that distributors with a monthly deductible withholding tax above Rs. 100,000 and retailers with more than Rs. 500,000 must now link their systems with the Board’s monitoring network. Under the Income Tax Ordinance, Section 236G pertains to advance tax on sales to distributors, dealers, and wholesalers, while Section 236H covers advance tax on sales to retailers. According to the notification, the amendment has been made under the powers granted by Section 50 of the Sales Tax Act, 1990, read with Sections 22 and 23. A new sub-rule has been added to Rule 150Q of the Sales Tax Rules, 2006, making system integration compulsory for businesses crossing the specified withholding tax thresholds. The move aims to expand documentation, enhance tax compliance, and strengthen digital monitoring of commercial transactions within the supply chain.