Digital Invoicing
About FBR's Digital Invoicing
What is FBR Digital Invoicing?
In simple terms, Digital Invoicing (DI) is a system where the FBR receives live data of every sale invoice generated by a registered person (business) in real-time or near real-time.
It’s a significant step up from the previous IRIS (Real-Time Invoice Verification) system. While IRIS focused on B2C invoices and QR codes, Digital Invoicing is more comprehensive, encompassing B2B, B2G, and B2C transactions.
Key Objectives of the System
Eliminate Sales Suppression: The primary goal is to stop businesses from under-reporting their sales to evade taxes.
Broaden the Tax Base: By capturing all transaction data, the FBR can identify unregistered businesses and bring them into the tax net.
Reduce Fake Invoices: It makes it extremely difficult to create and use fake invoices to claim fraudulent input tax credits (refunds).
Automate Compliance: Automates the process of filing sales returns and reduces the manual effort for businesses.
Real-Time Data Analytics: Gives the FBR powerful data to analyze economic activity and identify anomalies instantly.
How Does It Work? (The Technical Flow)
The system integrates directly with a business’s Point of Sale (POS) or billing software. Here’s the typical flow:
Invoice Generation: A sale is made, and an invoice is created in the business’s system (e.g., at a retail checkout, an e-commerce store, or for a wholesale transaction).
Integration: The business’s system is connected to the FBR’s Digital Invoicing System via an API (Application Programming Interface).
Data Transmission: The invoice data (in a specific JSON format defined by FBR) is automatically and instantly transmitted to the FBR’s portal.
FBR Validation & Response: The FBR system validates the invoice, assigns it a unique IRN (Invoice Registration Number), and sends a response back to the business’s system within seconds.
Printing/Sharing: Only after receiving the IRN from the FBR can the invoice be legally printed or shared with the customer. The printed invoice must include:
The unique IRN.
A QR code that contains the essential invoice details and the IRN.
Who Needs to Comply?
The FBR has been rolling this out in phases, targeting different sectors. Compliance is mandatory for the following registered persons:
Tier-1 Retailers: Large retail chains, supermarkets, etc.
Exporters: For their domestic supplies.
Manufacturers: For their supplies to distributors and retailers.
Specific Sectors: The FBR has been notifying specific sectors like pharmaceuticals, textiles, automotive, etc., to integrate in a phased manner.
Important: The list of obligated persons is expanding regularly. Businesses must check the latest FBR notifications to see if they fall under the mandate.
What Information is Transmitted to FBR?
The invoice data includes details like:
Seller’s name and NTN
Buyer’s name and NTN (if registered)
Invoice date and number
Item description, quantity, value
Tax charged (Sales Tax, Federal Excise Duty)
Total invoice amount
Benefits for Businesses
Automated Sales Tax Returns: The data you transmit populates your sales tax return automatically, reducing manual entry.
Faster Refunds: With verified and authentic transactions, the process for claiming input tax adjustments and refunds becomes smoother and faster.
Improved Record Keeping: Digital, FBR-verified records reduce disputes during audits.
Level Playing Field: Compliant businesses are no longer at a disadvantage against tax-evading competitors.
Challenges and Concerns
Integration Costs: Businesses need to upgrade their POS/accounting software or hire IT consultants to integrate with the FBR’s API, which incurs costs.
Internet Reliability: A stable internet connection is crucial for real-time transmission, which can be a challenge in some areas.
Technical Glitches: Like any new large-scale IT system, there can be downtime or bugs that disrupt business operations at the checkout counter.
Phased Roll-out Confusion: The gradual, sector-wise approach can lead to confusion about who exactly needs to comply and by when.
How to Get Started (For a Business)
Check Obligation: Verify if your business sector is notified by the FBR for mandatory integration.
Software Upgrade: Contact your software vendor (e.g., POS system, ERP provider) and ensure they are FBR-compliant and have implemented the required API.
Testing & Integration: Your software provider will need to integrate with the FBR’s system. You must then test the integration in the FBR’s sandbox (test) environment before going live.
Go Live: Once testing is successful, you can start transmitting live invoices.
Where to Find Official Information?
Always refer to the official FBR sources for the most accurate and up-to-date information:
FBR Official Website:
https://www.fbr.gov.pkFBR’s Iris Portal:
https://iris.fbr.gov.pkFBR’s Detailed Guidelines: Look for “Digital Invoicing – Functional and Technical Documentation” on the Iris portal.
