Section 64D: the 10% tax credit for integrating with FBR

Answer first. Section 64D of the Income Tax Ordinance 2001, inserted by the Finance Act 2026 with effect from 1 July 2026, gives a tax credit equal to 10% of the amount invested in eligible electronic resources — the equipment, hardware, software and other electronic components directly used to integrate with FBR’s digital platform. It is a credit set against tax you owe. It is not a rebate, and it is not a discount on invoicing software. Four conditions decide whether any of it reaches you: the spend has to be investment, because operational, maintenance and recurring expenses are excluded; the credit is available only in the tax year the resources are installed, integrated and fully configured, which a phased rollout can separate from the year you paid; it can be set only against normal tax liability under Division I or Division II of Part I of the First Schedule; and FBR may prescribe further conditions and restrictions. Carry-forward treatment is not established, so nothing here belongs in a business case as a recovered 10% until your tax advisor has looked at your own numbers.

The provision, and the package it arrived in

Section 64D was inserted into the Income Tax Ordinance 2001 by the Finance Act 2026, effective 1 July 2026. It provides a tax credit equal to 10% of the amount invested in eligible electronic resources.

Read “credit” precisely, because the word does most of the work here. A credit is applied against a liability. Ten per cent of an integration budget is not the same thing as ten per cent off an integration budget: the first has value only where there is liability of the right kind, in the right year, for it to reduce. Nothing we have been able to verify says what happens to a credit with no liability to attach to, and we are not going to fill that gap with an assumption.

It is worth being clear about what section 64D is doing inside the Finance Act 2026. The same Act empowered FBR to de-register or blacklist businesses that fail to integrate with the e-invoicing system, substantially increased the penalties for non-compliance, and introduced faceless administration through a National Faceless Center for audits, assessments and appeals. Section 64D points money at the taxpayer rather than away, and it does so conditionally. Everything around it is unconditional and points the other way. That is the honest frame for this piece: a conditional credit sitting beside an unconditional set of consequences.

Who it is for: three statutes, all federal

The credit is drafted around an obligation rather than a purchase. It is available to a person required, under the Income Tax Ordinance 2001, the Sales Tax Act 1990 or the Federal Excise Act 2005, to integrate with FBR’s computerised systems for real-time monitoring of production, or for electronic recording and reporting of sales and receipts.

Two things follow that are worth settling before anyone builds a number.

The trigger is being required, not choosing. A business that integrates ahead of any obligation, or that is outside every notified category and integrates because a customer asked it to, is not obviously within the wording.

The three statutes named are federal. The Punjab Sales Tax on Services Act 2012, under which PRA (the Punjab Revenue Authority, not PRAL — FBR’s licensed integrator) administers its Electronic Invoice Monitoring System, is not among them, and neither are the equivalent provincial Acts behind SRB in Sindh, KPRA in Khyber Pakhtunkhwa and BRA in Balochistan. A Punjab restaurant putting in an E-IMS-capable point of sale because PRA requires it is complying with a provincial law. Whether that spend reaches section 64D is not answered on the face of the provision, and it gets harder rather than easier where the same equipment serves a federal obligation as well, which is the common case.

There is also a trap on the income tax leg of that list. If you are being told you are required to integrate for income tax purposes because of SRO 288(I)/2026, check what that instrument actually is. SRO 288(I)/2026, dated 18 February 2026, is a draft substitution of Chapter VIIA (“Online Integration of Businesses”) of the Income Tax Rules 2002, issued for public comment. KPMG’s published reading is that it becomes enforceable only after FBR issues a final notification and an Income Tax General Order specifying implementation timelines and modalities. Some trade press has reported its contents as though they were already binding — the notified categories, the CCTV requirement at points of sale with recordings retained at least a month, the integrator licensing regime with a five-year non-transferable licence and Rs 10 million minimum paid-up capital. None of that is in force. The provincial revenue authorities, SRB, PRA, KPRA and BRA, formally opposed the draft in March 2026 and asked FBR not to finalise it without consultation, citing regulatory duplication; BRA asked for a delay.

That matters here in a narrow, practical way. A credit that keys off being required to integrate needs the requirement to exist. Sales tax electronic invoicing is a separate and settled regime with its own timetable — that side is covered in the deadlines guide. Income tax business integration under Chapter VIIA is the one being rewritten in draft. Being inside one does not put you inside the other.

What counts as eligible, and what does not

Eligible spend is the purchase, acquisition, installation and implementation of equipment, hardware, software and other electronic components directly used to integrate with FBR’s digital platform.

Excluded are operational, maintenance and recurring expenses.

Two words in that pair carry the weight.

“Directly.” The spend has to be directly used for the integration. A server refresh, a network upgrade or a laptop fleet that happens to carry invoicing traffic among everything else is not obviously direct, and how much dilution the word tolerates is defined nowhere we have found.

“Recurring.” This is the part a vendor has an incentive to blur, so we will be blunt about our own product. eInvoicePro is sold as a monthly or annual subscription — that is what our refund policy says, and it is what the invoices say. A recurring subscription fee is a recurring expense, and recurring expenses are excluded. The credit is on what you invest to integrate, not on what you pay us each year to keep running. Any vendor in this market telling you that section 64D gives you 10% back on their subscription is selling you a reading of the law, not software.

What may sit on the investment side is one-off spend: hardware bought and installed, components acquired for the integration, and one-off implementation work to configure and connect the systems. Whether a specific setup fee, licence fee or implementation charge in a specific contract lands as investment or as running cost is a facts-and-documents question, and it is answered by reading the contract, not the brochure.

One caution on the same point. If a subscription is being restructured so that it presents as a purchase in order to reach the credit, take advice before signing. Take advice before the contract is signed rather than after the return is filed.

Installed, integrated and fully configured

This is where the credit most often goes missing, and it has nothing to do with eligibility.

The credit is available only in the tax year in which the electronic resources are installed, integrated and fully configured. All three, and the qualifying year is the year all three are true — not the year the money left the account.

Consider an ordinary rollout. Hardware for forty branches is ordered and paid for. Thirty-two branches are live before the tax year closes. The last eight go live after it. The spend sits in one tax year. The condition, on its wording, is satisfied in another. And the section does not answer the question that a staged rollout immediately raises: is “fully configured” tested per site, per registration, or for the investment as a whole?

“Fully configured” is not defined in the provision and we have found no published test for it, no certificate, no form and no FBR statement on what evidences it. That makes it an evidence problem rather than a legal one, and evidence problems are solved before the fact or not at all.

Two events in an FBR integration carry a machine timestamp rather than somebody’s memory, and both are worth capturing whatever their eventual legal weight. The first is the issuing of production credentials after sandbox scenarios clear — as covered in the sandbox guide, once your test invoices succeed the production token is issued automatically, with no approval queue and no human sign-off, so the timestamp is real and unarguable. The second is your first live invoice accepted by FBR, which carries the acceptance timestamp inside the FBR invoice number. Whether FBR treats either as the moment of full configuration is unpublished. They are still the only dates in the whole process you will not have to reconstruct a year later.

The planning point is deliberately modest. We are not telling you to time a compliance rollout around a tax credit. We are telling you that if a rollout can reasonably be completed inside one tax year, and the project plan is quietly about to straddle two, that is worth surfacing to finance while it is still a choice — because carry-forward is not established, a mismatch between the spend year and the qualifying year is not something you can assume washes out later.

What the credit can be set against

The credit applies only against normal tax liability under Division I or Division II of Part I of the First Schedule to the Income Tax Ordinance 2001.

That is a real limit, not a formality. Liability arising otherwise than under those Divisions is not stated to be covered. A business whose income is largely charged outside them can complete a qualifying integration and still find the credit has little or nothing to reduce.

The same is true of a loss-making year, which is not a remote scenario for a business that has just spent on an integration it did not choose. If the qualifying year is a year with no normal tax liability, the credit has nothing to attach to in that year — and what happens to it after that is the carry-forward question, which is open.

What is in the section, and what is not

This distinction decides how much weight any of it can carry in a plan.

The last three rows are the ones to take to your advisor. A power to prescribe further conditions means the rules governing a claim can be settled after the spend is committed, and the absence of a published claim mechanic means the first person in your organisation to find out how this is actually claimed will probably be whoever files the return.

What to keep, starting now

None of this is expensive to do while a project is running, and all of it is expensive to reconstruct afterwards.

• Split the contract, not just the total. Ask for hardware, one-off implementation and recurring subscription as separate line items on separate invoices. A single annual figure is the hardest possible starting point for an eligibility question.
• Date the three events. Installation, integration and full configuration, per site and per entity, with whatever the system emits rather than an email saying it went fine.
• Keep the production credential timestamp and the first accepted live invoice. Both are machine-generated and neither can be re-created later.
• Record what obliges you to integrate. Which statute, which category, which notification. That is the eligibility gate, and it is the question an advisor will ask first.
• Name the tax year before the project decides it. Get finance to state which tax year the completion is expected to fall in, in writing, while the schedule can still change.

Treat all of it as material for a conversation with a qualified tax advisor. This page is general information about what a provision says, not advice about what your business can claim.

FAQs

Does section 64D make FBR invoicing software 10% cheaper? No. It is a tax credit set against liability, not a reduction in a price, and it covers investment rather than running cost. eInvoicePro is sold as a monthly or annual subscription, and a recurring subscription fee is a recurring expense, which the provision excludes along with operational and maintenance costs. What may sit on the eligible side is one-off spend directly used to integrate with FBR’s digital platform, such as hardware purchased and installed or one-off implementation work. Which line items in your own contract fall where is a question for your tax advisor with the contract in front of them, and any vendor promising you 10% off a subscription is selling you a reading of the law rather than software.

We are installing E-IMS because PRA requires it in Punjab. Does section 64D apply to us? Take it to your advisor, because it is not answered on the face of the provision. Section 64D is drafted around persons required to integrate under the Income Tax Ordinance 2001, the Sales Tax Act 1990 or the Federal Excise Act 2005. Those three are federal. The Punjab Sales Tax on Services Act 2012, under which PRA administers E-IMS, is not among them, and neither are the equivalent Acts behind SRB, KPRA and BRA. That does not dispose of the question for a business that is also federally registered and integrating for federal purposes using the same equipment, which is a common position and exactly the fact pattern that needs professional advice rather than a general answer.

We paid for the hardware in one tax year and finished configuring it in the next. Which year is the credit in? The credit is available in the tax year in which the electronic resources are installed, integrated and fully configured. All three have to be true, so the year of the spend is not necessarily the year of the credit. “Fully configured” is not defined in the provision and we have found no published test for it, which makes a staged rollout an evidence problem: keep dated, system-generated proof of when each stage completed at each site rather than reconstructing it later. Do not assume the spend simply carries into the qualifying year, because carry-forward treatment is not established.

What if we have no normal tax liability in the year we finish? Then the credit may have nothing to attach to. It applies only against normal tax liability under Division I or Division II of Part I of the First Schedule to the Income Tax Ordinance 2001, so a loss-making year, or a year in which income is charged otherwise, can leave the credit with no liability to reduce. Whether anything survives into a later year is the carry-forward question and that is unresolved. This is the single most important thing to model with your advisor before an integration budget is approved on the assumption that 10% comes back.

Can we carry an unused credit forward to a later year? We do not know, and we are not going to guess. Carry-forward treatment for section 64D is not established in anything we have been able to verify, and a piece of content that told you it was would be making the answer up. Ask your tax advisor to check the current text of the section together with any rules, circulars or general orders issued since it was inserted, and do not build a multi-year recovery assumption on top of an open question.

How do we actually claim it? We have found no published form, return field, schedule or documentation checklist specific to section 64D. The section also allows FBR to prescribe further conditions and restrictions, which means the claim mechanics can be settled after your spend is committed and can carry requirements that are not visible in the section as enacted. Ask your tax advisor how they intend to claim it in the return for the relevant year, and what evidence of installation, integration and full configuration they want on file before that return is filed.

Related reading: what non-compliance actually costs and getting through sandbox to go-live.