Textile Industry Warns FBR Over Unfair Sales Tax Penalty Changes in Budget

The All Pakistan Textile Mills Association (APTMA) has urged the Federal Board of Revenue (FBR) to amend proposed sales tax penalties in the Finance Bill 2026, warning that compliant businesses could be punished for mistakes and fraud committed by their suppliers.

In a letter addressed to FBR Chairman Rashid Mahmood Langrial, APTMA expressed support for the government’s efforts to curb fake invoicing and tax fraud but argued that the proposed insertion of Serial Nos. 30 and 31 in Section 33 of the Sales Tax Act, 1990 unfairly shifts the burden of supplier misconduct onto genuine taxpayers.

According to APTMA, the proposed provisions could force buyers to reverse input tax claims, pay default surcharges and face additional penalties if suppliers later fail to declare output tax or are placed on FBR’s Simulated Invoice Issuers Register, even when buyers had relied on invoices validated through FBR’s own computerized systems.

The textile body said manufacturers dealing with thousands of monthly transactions cannot practically monitor the future compliance status of hundreds of suppliers after purchases have already been completed. It warned that the measures would increase compliance costs, create uncertainty in business transactions, disrupt supply chains and lead to unnecessary litigation.

APTMA requested the government to amend Serial No. 30 to provide safeguards for bona fide taxpayers and withdraw Serial No. 31 in its current form, arguing that penalties should only be imposed where fraud, collusion or deliberate tax evasion is proven.