Business Desk 
Jul 14, 2025
The Federal Board of Revenue (FBR) has begun implementing new rules to control input tax adjustment limits for registered taxpayers starting July 1, 2025.
However, the rules were developed two weeks ago, and the FBR is currently applying the automated risk-based approach to monitor and manage the sales tax claims of registered taxpayers.
Using the automated risk management system, the FBR would limit or suspend the input tax adjustment for registered sales taxpayers based on a data-driven risk management system that will assess the overall risk by examining the taxpayer's information and behaviour.
If something suspicious is reported on the taxpayer record, the automated system is designed to stop or suspend the amount of input tax that can be adjusted against the output tax.
This action came about as a result of the amendment that introduced the new Section 21(s) of the Income Tax Ordinance (ITO) in the Finance Act 2025 and is effective immediately.
Although the law is effective from the date of the Finance Act, the FBR has not issued any practical or explanatory guidance on how it will assess registered taxpayers or how it will notify taxpayers of the impending assessment of tax on any account.
Therefore, as part of the FBR process, they give taxpayers the right to dispute or challenge a determination made by the FBR in their reviews.
Suppose a taxpayer believes the input tax has been unfairly deferred or limited. In that case, they can apply with supporting documents to the relevant Commissioner of Inland Revenue, who must decide the matter within 30 days.
