The Federal Board of Revenue (FBR) has clarified that the movement of goods between a factory and the same registered person’s own warehouse will not be treated as a taxable supply, provided both premises operate under the same Sales Tax Registration Number (STRN).
The clarification, issued through Sales Tax General Order No. 25 of 2026, also means that such movements do not require the issuance of a digital tax invoice. However, consignments must be accompanied by a prescribed Stock Transfer Note (STN) prominently marked “Stock Transfer — Not a Taxable Supply.”
Under Section 2(33) of the Sales Tax Act, 1990, a supply generally involves a transfer of ownership or consideration. Since goods transferred between premises belonging to the same registered person do not involve a sale, they remain outside the scope of sales tax.
The FBR has introduced detailed standard operating procedures (SOPs) to regulate such transfers and prevent disputes during transit inspections.
Under the procedures, the dispatching unit must issue a sequentially numbered STN, with the value of goods recorded at cost for inventory purposes. The document must remain with the consignment throughout its journey and be presented at checkposts when required.
After receiving the goods, the warehouse manager must acknowledge the consignment and update the warehouse stock register. The factory is also required to maintain corresponding inventory records in accordance with the applicable rules.
However, if the receiving warehouse has a separate STRN, the transfer will be considered a taxable supply. In such cases, the dispatching unit must issue a digital invoice through an authorised integrator or PRAL, charge output tax and report the transaction in its sales tax return.
The FBR has directed field formations not to treat the absence of a tax invoice as non-compliance where both premises operate under the same STRN and the required STN accompanies the consignment.
The directive also instructs officials to avoid unnecessary harassment of taxpayers. Officers have been barred from demanding drivers’ CNICs or detaining vehicles without proper justification.
Goods in transit should not ordinarily be physically inspected or unloaded, except for items covered under the Third Schedule, which may be checked only to verify the required retail price markings.
The FBR warned that any violation of these instructions would be taken seriously and stressed that unnecessary harassment of taxpayers would not be tolerated.
