FBR splits sales tax wing from income tax

The Federal Board of Revenue has separated the administration of sales tax and federal excise duty from income tax, creating a member-level post at its Islamabad headquarters and posting 54 Inland Revenue officers to the new wing.

An official notification issued on Friday named Dr Muhammad Sarmad Qureshi, a Grade-21 officer of the Inland Revenue Service, as Member Sales Tax and FED (Technical). The 54 officers moved to the new setup range from BS-17 to BS-21, according to ProPakistani, which reported the reorganisation first.

The FBR's Board-in-Council approved the new member post, and the board's organisational structure has been revised under a new reporting system. Income tax work stays where it is for now. No post of Member, Income Tax (Technical) has been notified, and taxpayers' income tax matters will continue to be handled by Member Inland Revenue (Operations) and the existing income tax setup. Separate sales tax zones are to be created in the field formations; the reports gave no date for that.

Investify, summarising a report by Profit by Pakistan Today, said the changes were announced late on Friday and that distinct sales tax and income tax commissioners are expected to take up their roles from January 2027. Businesses may consequently need to approach different tax offices for income tax, sales tax and customs matters, it said.

Tax professionals have raised questions about how chief commissioners will report and how responsibilities will be divided between the new sales tax post and the existing operations member, according to Investify's summary of the Profit report.

ProPakistani reported, citing sources, that the FBR had prepared a phased plan for the separation but did not publish its details. It said the restructuring is intended to give sales tax and federal excise duty their own administrative structure, with dedicated officers and field formations.

The reorganisation keeps customs outside the new arrangement. Under the revised setup described by both reports, a taxpayer's income tax file and sales tax file will sit with different officers, while income tax remains under the operations member at headquarters.