FBR Advance Payment Invoices 2026: SRO 2063 Makes Sales Tax Invoice Mandatory on Advance Payments

The Federal Board of Revenue (FBR) has made sales tax invoices mandatory for registered taxpayers on advance payments received against future supplies. The new procedures, notified through SRO 2063(I)/2026 on 5 November 2026, change when sales tax on an advance must be declared, and require every advance to be documented with its own invoice.

• Invoice on receipt: Under the revised rules, a taxpayer who receives full or partial advance payment, including instalments, must issue an advance receipt invoice when each payment is received.
• Tax declared at once: The sales tax on that advance must be declared in the return for the tax period of receipt, not deferred until the supply is completed.

FBR Advance Payment Invoices at a Glance

What Has Changed Under SRO 2063(I)/2026

• Invoice at the time of payment: Taxpayers receiving full or partial advances, including instalments, must issue an advance receipt invoice when each payment is received, not at supply.
• Tax declared in the same period: Sales tax on the advance must be declared in the return for the period of receipt, not deferred until the supply is completed.
• Advance invoice counts as a tax invoice: The advance receipt invoice must carry the particulars prescribed under Section 23, and counts as a tax invoice for Sections 7 and 8.
• No double taxation: The FBR has moved to prevent the same amount being taxed twice, so tax already paid on an advance is not charged again at supply.

Step by Step: How the New Advance Invoice Works

• Step 1, receive the advance: A registered taxpayer receives an advance from a customer for goods or services to be supplied later, whether full, partial or an instalment.
• Step 2, issue the advance receipt invoice: When the payment is received, the taxpayer issues an advance receipt invoice carrying the Section 23 particulars.
• Step 3, declare the tax: The output tax on that advance is declared in the return for the period of receipt, even though the supply is not yet made.
• Step 4, link further payments: If the customer pays again for the same supply, a separate advance receipt invoice is issued, electronically linked for a complete record.
• Step 5, issue the final invoice: When the goods or services are supplied, the taxpayer issues a final sales tax invoice referencing the earlier advance invoices, with tax already accounted for not counted again.

Tax Rates, Adjustments and Cancellations

• Rate at the time of receipt: The rate on an advance is the rate prevailing when the payment is received, so a later change does not alter tax on money already received.
• Rate on the remaining amount: Any remaining amount is taxed at the rate on the date of supply, so one transaction can involve two different rates.
• Increase or reduction: The rules provide adjustments where an advance or the value of a supply is increased or reduced after the advance.
• Refunds and cancellations: Adjustments are also provided where an advance is refunded, or a supply is cancelled in full or in part, under Section 9 and Rules 19 to 22.

What Businesses Must Do Now

• Update billing systems: Businesses should update invoicing systems so an advance receipt invoice is generated when each payment is received.
• Train accounts staff: Accounts staff must know tax on advances is declared in the return for the period of receipt, not held over until delivery.
• Link invoices properly: Every advance receipt invoice must be electronically linked with later invoices and the final sales invoice for the same supply.
• Check Section 23 particulars: Each advance receipt invoice must carry the Section 23 particulars, so businesses should confirm their invoice format includes them.

Contact and Helpline Details

Only the official FBR portal is verified here. No helpline number was given in the reports of SRO 2063(I)/2026, so businesses should rely on the official notification text.

Conclusion

• Advances now invoiced: The FBR advance payment invoices rule under SRO 2063(I)/2026, issued on 5 November 2026, brings advance payments into the sales tax invoice system once money is received.
• What taxpayers must do: Registered taxpayers under Section 23 must issue an advance receipt invoice for each payment, declare the tax in that period’s return, and electronically link every document until the final sales invoice.
• Rates and double taxation: The rate on the advance is fixed at receipt, the balance is taxed at the rate on the date of supply, and the same amount is never taxed twice.
• Act now: Businesses that take advances should update billing and record-keeping now, and check the official notification on the FBR portal.

Frequently Asked Questions

What is SRO 2063(I)/2026?
It is the FBR notification of 5 November 2026 substituting Rule 160 of the Sales Tax Rules, 2006, with new advance invoicing and tax declaration procedures.

When must an advance receipt invoice be issued?
When each advance payment is received, whether full, partial or an instalment against the same supply.

When is the sales tax on an advance declared?
In the return for the period of receipt, not deferred until the supply is completed.

Which tax rate applies to an advance payment?
The rate prevailing at receipt applies to the advance; any remaining amount is taxed at the rate on the date of supply.