Sales Tax Invoice Penalties: Fictitious Supplies and Unmatched Input

Full Article

A purchase invoice is not enough if the underlying supply never occurred. New entry 29 addresses simulated or fictitious transactions established through notice and adjudication.

Fictitious-invoice consequences

The penalty equals the face value of the simulated or fictitious invoice. The framework includes a publicly accessible issuer register following show-cause notice and an opportunity of hearing, with consequences for counterparty input credits. Keep delivery, payment and stock evidence, not just an invoice image.

Confirmed input/output mismatch

Entry 30 addresses input that cannot be matched to corresponding supplier output for the same or proximate period, confirmed after notice and hearing. It specifies a 20% penalty on the unmatched input, alongside reversal and default surcharge.

Failure to reverse after listing

Entry 31 provides a 20% penalty on unreversed inadmissible input where the recipient fails to reverse within sixty days of the issuer's listing, in addition to reversal and surcharge.

Respond to the actual allegation

Distinguish a timing mismatch from a fictitious supply. Reconcile tax periods and supplier declarations, preserve commercial evidence and observe the response deadline. These are separate statutory entries; their amounts should not be combined without identifying the defaults that actually apply.

Source and scope

Finance Act 2026, official FBR gazette, PDF pages 17-18. Text reviewed on 14 October 2026. This explains the enacted amendment; a notification-dependent procedure must be checked separately before use.