Do wholesalers and distributors have to issue electronic sales tax invoices integrated with FBR?

A registered distributor in Lahore or a wholesaler in Karachi can be required to issue every sales tax invoice through a system that reports each sale to the Federal Board of Revenue in real time. The duty is not automatic for everyone: it switches on when the Board names a person or class of persons by notification.

What does the law say?

Section 23 of the Sales Tax Act, 1990 contains three powers that together make up electronic invoicing:

• Section 23(3) says a registered person making a taxable supply shall, subject to conditions, restrictions and limitations the Board specifies by notification, issue electronic invoices.
• Section 23(5), added by the Finance Act, 2025, lets the Board require any person or class of persons to integrate their electronic invoicing system with the Board’s Computerized System for real-time reporting of sales, from a date the notification specifies.
• Section 23(6) says a licensed integrator shall integrate the systems of the persons referred to in section 23(5).

Section 23(1) was also substituted by the Finance Act, 2026 so that a tax invoice, including an advance receipt invoice, bears “a verifiable and unique FBR invoice number”. A proviso says that condition applies from the time the Board notifies.

The detail sits in Chapter XIV of the Sales Tax Rules, 2006, substituted in January 2025. The first rule of that chapter says the Board shall notify, in the official Gazette, the registered persons or classes covered. Once notified, a distributor becomes an “integrated person”.

What does an integrated distributor have to do?

Rule 150R sets the operating duties:

1. Register, install and integrate the electronic invoicing hardware and software with the Board’s system in the manner set by a Sales Tax General Order (rule 150R(1)).
2. Give the Board details of outlets, points of sale or invoicing machines (rule 150R(2)).
3. Make no supply except through the integrated outlets, points of sale or machines (rule 150R(3)).
4. Use a system that transmits invoice data, receives the unique FBR invoice number and prints a QR code (rule 150R(4)).
5. Issue electronic invoices for exempt items through the same system (rule 150R(9)).
6. Bear the cost of equipment and software (rule 150R(10)) and display an “Integrated with FBR” signboard (rule 150R(11)).

Rule 150R(5) says Annexure-C of the sales tax return is auto-filled from these electronic invoices. Rule 150R(13) lists 26 particulars the invoice must carry, including the HS code, unit of measurement, sales tax withheld at source and further tax.

Rule 150S then requires a real-time verifiable electronic invoice for every taxable supply, with debit and credit notes also issued electronically. All of these are kept for six years on electronic media.

Can the deadline be extended?

Yes, within limits. Rule 150V lets the Commissioner Inland Revenue having jurisdiction allow up to sixty days in aggregate, in fifteen-day intervals, for integration or compliance. During that time the distributor continues to issue paper invoices.

What happens if a notified distributor does not comply?

Rule 150X says an integrated person who tampers with the system, sells otherwise than as the chapter prescribes, or contravenes it, is subject to penalty under section 33. The matching entry is serial 25A of the section 33 Table. It covers a person required to integrate as stipulated under section 23 (or the other provision named in that entry) who fails to register, fails to integrate, or, after words added by the Finance Act, 2025, fails to issue electronic invoices after integration.

Default	Penalty under S. No. 25A
First default	Rs. 500,000
Second default, after fifteen days of the order for the first	Rs. 1,000,000
Third default, after fifteen days of the order for the second	Rs. 2,000,000
Fourth default, after fifteen days of the order for the third	Rs. 3,000,000

The same entry says the business premises are liable to be sealed. A proviso waives the first penalty if a retailer integrates before the penalty for the second default is imposed. That proviso refers to a retailer, and the Table does not say whether it extends to a wholesaler or distributor.

Worked example (illustrative figures)

Rehman Distributors in Multan is notified for integration and is given a date. It does not integrate.

1. An order is made for the first default: Rs. 500,000.
2. Fifteen days after that order it still has not integrated. Second default: Rs. 1,000,000.
3. Running total after two orders: Rs. 500,000 + Rs. 1,000,000 = Rs. 1,500,000.
4. If a third order follows fifteen days later, Rs. 2,000,000 is added, bringing the total to Rs. 3,500,000.

The dates and the business are invented. The amounts are those printed in serial 25A.

Common mistakes

• Treating integration as optional once notified. Rule 150R(3) bars any supply except through integrated points.
• Assuming exempt lines can go on a paper bill. Rule 150R(9) routes exempt items through the integrated system too.
• Confusing serial 25A with serial 2. Serial 2 is the general penalty for not issuing an invoice at all. Serial 25A is specific to integration and electronic invoicing.
• Assuming the site can confirm who is notified. The Board’s notifications and Sales Tax General Orders under Chapter XIV are not in this corpus.

What to check in the official text

Read section 23 of the Sales Tax Act, 1990 as amended to 30 June 2026, and serial 25A of the section 33 Table in the official PDF, since the Table is printed as a grid. Then read Chapter XIV (rules 150R to 150X and the application rule before them) of the Sales Tax Rules, 2006, which this site holds as amended to 30 June 2025. Confirm whether a Board notification names your class of persons, and the date it sets, from the notification itself.