Federal Sales Tax Input Limit: What Finance Act 2026 Changes in Section 8B

Full Article

The federal Finance Act 2026 amendment does not replace section 8B with a universal 80% input-tax limit. It adds a power for FBR to reduce or enhance the limit by a Gazette notification based on a registered person's digital compliance.

What compliance can affect the limit?

The new proviso refers to production monitoring, digital invoicing, e-bilty, POS and other prescribed electronic systems for integrating data. A business should identify which systems it is legally required to use and whether a notification actually changes its limit.

A workable return review

1. Establish the normal section 8B limit and any exception applicable to the business.
2. Locate the Gazette notification relied on for a changed limit.
3. Check the covered person or class, effective period and digital-compliance conditions.
4. Reconcile eligible input invoices and output tax before applying the limit.

The amendment is an enabling provision. An announcement about digital integration does not, on its own, show that a particular taxpayer's limit has changed.

Keep federal and provincial returns separate

Federal sales tax on goods and provincial sales tax on services operate under different legislation. A Punjab proposal or provincial limit must not be copied into a federal return. This article addresses the federal section 8B amendment only.

Legislation checked

Finance Act 2026, PDF pages 10-11. Source-text review: 14 October 2026. The Act generally commences on 1 July 2026, subject to express exceptions. Any required implementing notification must also be checked before applying a concession.