FBR to link FASTER refunds with digital compliance in FY27 budget

The federal government has decided to link sales tax refunds under the FASTER system with compliance with digital monitoring and invoicing requirements, restricting payments to exporters and other taxpayers that fail to adopt the prescribed systems.

The measure is expected to be notified as part of the fiscal year 2026-27 budget and will cover production monitoring systems, sales tax digital invoicing and digital eye systems installed at manufacturing premises.

According to sources, the Federal Board of Revenue (FBR) will introduce a new risk parameter into the FASTER refund system to determine whether eligible taxpayers have complied with the required digital initiatives.

Exporters and other large taxpayers that fail to install production monitoring systems or integrate their sales tax records digitally will not be able to receive refunds through FASTER. The proposed parameter will apply to five export-oriented sectors: textiles, leather, surgical goods, carpets and sports goods.

Exporters operating in these sectors that also sell products in the domestic market are expected to be affected by the new requirement.

Sales tax refunds paid through FASTER to the five export-oriented sectors currently average between Rs30 billion and Rs40 billion per month.

Registered taxpayers will be required to comply with digital invoicing rules to continue receiving these refunds, the sources said.

The FBR has already set June 15, 2026, as the deadline for all bottled-water manufacturers to install electronic production monitoring systems.

Similar monitoring requirements apply to packaged milk, iron and steel, oil and ghee manufacturing facilities. Production monitoring systems are also being installed at textile spinning units.

Under the proposed framework, compliance with production monitoring and digital integration requirements will become part of the risk assessment used to process refund claims.

The government is also considering mandatory installation of digital cameras and digital eye systems at manufacturing facilities covered by the requirements.

A formal notification setting out the revised refund conditions is expected to be issued with the fiscal year 2026-27 budget.