FBR Clarifies Tax Rules for Moving Goods Between Factory and Own Warehouse
KARACHI: The Federal Board of Revenue has issued a landmark clarification regarding the movement of goods from a factory to a registered person’s own warehouse, ruling that such transfers do not constitute a “supply” and therefore do not require a digital tax invoice.
In Sales Tax General Order No. 25 of 2026, issued by Khalid Mehmood, Second Secretary (ST-L&P), the FBR stated that inter-premises movement of goods under the same Sales Tax Registration Number does not attract the obligation to issue a digital invoice under Section 23 of the Sales Tax Act, 1990. The order explains that since no change of ownership or consideration occurs in such movements, the transaction falls outside the charge created under Section 3 of the Act.
However, to prevent such movements from being mischaracterized as undocumented supply during transit checks or audits, the FBR has mandated that every consignment must be accompanied by a prescribed non-fiscal Stock Transfer Note.
The despatching unit must generate a sequentially numbered Stock Transfer Note bearing particulars such as STRN, despatching unit and receiving warehouse details, description of goods, HS/PCT code, quantity, value at cost, vehicle registration number, and driver CNIC. The note must be clearly endorsed “Stock Transfer — Not a Taxable Supply.”
The value shall be recorded at cost for inventory-control purposes only and must not resemble a tax invoice. The Stock Transfer Note must accompany the consignment at all times and be produced on demand at check-posts.
Both despatching and receiving units must update their stock registers, retain copies, and reconcile records monthly, with all records preserved for six years under Section 24 of the Act.
If the receiving warehouse holds a separate STRN, the movement is treated as a taxable supply, requiring a digital invoice through a licensed integrator or PRAL, with output tax accounted for in the normal manner.
The order also lays down strict instructions for field formations during transit checks. No officer may demand the driver’s CNIC or any document beyond the digital invoice or Stock Transfer Note. Vehicles carrying goods without a digital invoice shall not be diverted, detained, or subjected to physical checking or unloading.
Non-issuance of a digital invoice shall be dealt with separately under the Act and shall not be grounds for detention of the vehicle or goods in transit. The only exception is for goods specified in the Third Schedule, which may be checked solely to verify that retail prices are printed or embossed as required under Section 3(2)(a).
The order states that harassment of taxpayers in any form or manner is highly objectionable and shall not be tolerated, and any departure from these instructions shall be viewed seriously.
The order has been distributed to the SA to the Member (IR-Ops), Chief Commissioners-IR, the Director General (IT&DT), and the Chief (TPS)/Webmaster for uploading on the FBR’s website. The move is expected to ease the movement of goods for businesses operating multiple premises under a single STRN while maintaining robust documentation to prevent tax evasion.
