ISLAMABAD: The Federal Board of Revenue (FBR) will begin adjusting the input tax limits for registered taxpayers starting July 1, 2025. This move is part of the FBR’s efforts to control input tax adjustments by utilizing a data-driven, automated risk management system.
Under the Finance Act 2025, the FBR has been granted the authority to set higher or lower limits on input tax adjustments for sales taxpayers. The system will also allow the deferral of input tax on sales transactions. These measures are aimed at improving tax compliance and managing risks more effectively.
According to Section 21(s) of the Income Tax Ordinance (ITO), the FBR can apply these changes using an automated system. However, if a registered taxpayer disagrees with the adjustment, they have the option to file an application with the Commissioner within 30 days. The Commissioner will then review the case and make a decision within 30 days.
This new mechanism is part of ongoing efforts to streamline tax administration and enhance the efficiency of tax collection through automated systems.
