Pakistan tax authority separates sales tax, income tax functions from January 2027

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Pakistan tax functions split 2027

Highlights

Federal Board of Revenue reorganized operations, transferring 54 Inland Revenue officials and separating sales tax and income tax functions effective January 2027.
Dr. Muhammad Sarmad Qureshi was appointed Member, Sales Tax & FED (Technical), and a new reporting post created at FBR headquarters in Islamabad, but the corresponding income tax technical role remains unnotified.
Tax experts and critics warn the split could complicate business compliance, trigger large-scale reshuffling of taxpayer files, and undermine tax integration efforts.

Reorganisation plan and administrative changes

As first reported by Business Recorder, the Federal Board of Revenue on Friday transferred and posted 54 Inland Revenue officials from BS-17 to BS-21 as part of a reorganisation that separates sales tax and federal excise duty functions from income tax operations.

Under the new arrangement, taxpayers will deal with separate commissioners for sales tax and income tax from January 2027, while customs remains a third channel. Dr. Muhammad Sarmad Qureshi, an Inland Revenue Service officer in BS-21, has been appointed as Member, Sales Tax & FED (Technical), and the FBR's organisational structure has been revised under the new reporting system.

The report says the FBR's Board-in-Council approved creation of the new post at the agency's headquarters in Islamabad. However, by the time of publication, the FBR had not notified a corresponding Member, Income Tax (Technical) role, indicating that income tax matters may remain under the Member Inland Revenue (Operations) while separate sales tax zones are created in field formations.

Taxpayer impact and reform concerns

Tax experts say the split could complicate compliance by requiring businesses to engage with separate officials and offices for income tax and sales tax matters. They also question whether chief commissioners will report directly to the FBR chairman or remain under the existing Inland Revenue operations chain if the new sales tax member reports to the chairman.

Critics describe the hybrid model as a setback to tax integration, warning that it could trigger large-scale reshuffling of taxpayer files and separate income tax and sales tax records in field offices. They argue the move runs counter to broader efforts by the federation and provinces to integrate tax operations under one roof.

Experts have asked the FBR chairman to issue a detailed clarification on the powers and functions of the new Member, Sales Tax & FED (Technical), as well as the remaining jurisdiction of the Member Inland Revenue Operations, to reduce uncertainty for taxpayers.

Previously, we highlighted Pakistan’s shift to automated tax scrutiny for 2026 income tax returns under the FBR’s new e-scrutiny rules.

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