FBR Finalises Digital Integration Tax Credit Rules Under Section 64D

Independently written and published by Shahbaz Shah Legal Journal.

Final rules define the evidence for a digital integration tax credit

Pakistan’s Federal Board of Revenue has inserted Rule 33U into Chapter VIIA of the Income Tax Rules, 2002. S.R.O. 1904(I)/2026, dated 26 October 2026, sets conditions and restrictions for the integration tax credit under section 64D of the Income Tax Ordinance, 2001. The notification records that the draft was previously published through S.R.O. 1692(I)/2026 on 6 October. This is the final amendment, rather than a fresh invitation for comments. Notification, page 1.

The rules connect the claim to successful integration with FBR’s computerized system, exclusive use of the relevant resource and documentary proof of the amount invested. Purchasing equipment alone does not satisfy all the conditions. Rule 33U(1).

The statutory credit is 10 per cent, with a limited tax adjustment

Section 64D, as substituted by the Finance Act, 2026, provides a credit of ten per cent of the amount actually invested in the electronic resource. It applies to persons required by the income tax, sales tax or federal excise legislation to integrate for real-time production monitoring or the recording or reporting of sales or receipts. The credit is available only against normal tax payable under Division I or Division II of Part I of the First Schedule. Finance Act 2026, section 5(9), Gazette page 560; substituted section 64D(1)–(4).

Rule 33U supplies the conditions and the method for identifying eligible investment. Its reference to section 64D(2)–(4) means that a qualifying purchase is not automatically a cash refund or a credit against every category of tax. Rule 33U(6); Section 64D(4), Gazette page 560.

The five conditions that must be supported by the record

Rule 33U(1) requires the following:

• A legal requirement to integrate with FBR’s system during the relevant tax year for the specified monitoring or sales and receipts reporting purposes.
• Acquisition, installation or implementation of the resource, with successful installation, integration and configuration during that tax year.
• Direct and exclusive use of the hardware, software or other electronic component for the required integration.
• An integration, activation, commissioning or configuration record generated or confirmed by FBR’s system, identifying the taxpayer, resource and activation date.
• An acquisition document such as an invoice, bill, agreement or licence, evidence of payment or liability as applicable, and supporting documentary or electronic evidence establishing the actual investment.

These requirements appear together in Rule 33U(1)(a)–(e), page 1. A vendor’s invoice should therefore be reconciled with the installation and FBR integration records, rather than treated as a substitute for them.

Which costs count as investment?

The qualifying amount includes the purchase or acquisition price and necessary one-time costs directly attributable to installation, configuration, interface development, integration, testing and implementation. Those costs must bring the resource into operation for the required integration. Rule 33U(2).

The amount must be reduced by discounts, rebates, refunds, grants and subsidies received or receivable for that resource. Taxes or duties that are refundable, adjustable or recoverable by the claimant are excluded. The calculation therefore starts with the eligible net investment, rather than the gross invoice total without adjustment. Rule 33U(3).

Recurring expenses and general-purpose equipment are excluded

The rule excludes operating costs, routine and annual maintenance, repairs, post-commissioning support and recurring service charges. It also excludes internet, telecommunications and utilities, salaries, training, consumables and financing costs. These expenses should not be mixed with eligible one-time implementation charges. Rule 33U(3)(b)–(c).

A general-purpose system or component is excluded where it is not directly and exclusively used for integration. However, the rule preserves an exception for a separately identifiable component dedicated exclusively to that integration. The correct inquiry is the evidenced purpose and allocation of the particular component, rather than the label “computer” or “software” alone. Rule 33U(3)(d).

Claim year, IRIS particulars and verification

The credit belongs in the income return for the tax year in which the resource is installed, integrated and configured with FBR’s system. The same expenditure cannot be claimed more than once under section 64D. An invoice date alone does not replace the installation and integration requirement. Rule 33U(4).

The return, or a schedule made available on IRIS, must identify the resource, vendor or supplier, invoice or agreement reference, acquisition or implementation date, investment amount, integration or resource number, and activation or commissioning date. The Commissioner may verify the claim from records maintained under section 174. Rule 33U(5)–(6).

A practical claim file should connect the invoice and agreement to the particular resource, separate eligible one-time charges from recurring costs, record discounts and recoverable taxes, and preserve FBR’s integration confirmation. This is a way to organize the evidence required by the rule, rather than an additional statutory form.

Frequently asked questions

What is the tax credit rate for eligible digital integration investment?

Section 64D(2), as substituted by the Finance Act 2026, provides a credit of 10 per cent of the amount actually invested, subject to the statutory conditions and Rule 33U. It is available only against the normal tax specified in section 64D(4). Section 64D(2)–(4).

Is a purchase invoice enough to claim the credit?

No. Rule 33U also requires successful integration and configuration during the relevant tax year, exclusive use for the required integration, and a system-generated or system-confirmed integration record, together with supporting acquisition and payment or liability evidence. Rule 33U.

Do internet and routine maintenance costs qualify?

No. Rule 33U(3) excludes internet, telecommunication and utility charges, maintenance, repairs and recurring service costs, among other excluded expenses. Rule 33U.

Can a general-purpose computer qualify?

A general-purpose system that is not directly and exclusively used for integration is excluded. A separately identifiable component dedicated exclusively to integration can fall within the express exception. Rule 33U.

In which tax year is the credit claimed?

The income return for the year in which the electronic resource is installed, integrated and configured with FBR’s system. The same expenditure cannot be claimed more than once under section 64D. Rule 33U.

Official sources

• FBR — S.R.O. 1904(I)/2026, 26 October 2026, complete two-page notification
• FBR — Finance Act, 2026, section 5(9), Gazette page 560 (PDF page 34)