How to Show a Discount on an FBR Digital Invoice (Trade Discount, Bonus Packs and Free Goods)

Almost every shop and distributor in Pakistan gives a discount. Very few know how to put one on an FBR digital invoice without the invoice bouncing back. This page gives the rule, the numbers, and the two mistakes that cause most rejections.

The facts up front. The Sales Tax Act 1990 lets a trade discount reduce your tax under section 2(46)(b), but only if three things are true at once: the invoice shows the discounted price, the invoice shows the tax on that discounted price, and the discount is in conformity with normal business practices. The law names no percentage. There is no legal ceiling such as 5 percent or 10 percent anywhere in that clause.

The second fact is the one that breaks invoices. FBR does not subtract the discount for you. It works out the tax from the value you send in the sales-value field, and rejects the line with error 0104 if your tax does not match. So the discount must already be taken off before you send that value. The discount box shows the buyer what happened. It is not a calculator.

The third fact catches wholesalers. If your goods are Third Schedule goods, the tax is worked out on the printed retail price, not on the price you actually charge, so a discount does not reduce the tax at all.

Sales tax is charged on the value of supply, which is defined in section 2(46) of the Sales Tax Act 1990. Clause (b) covers trade discounts. A trade discount is a price reduction given as part of normal trading, such as a bulk rate for a distributor or a seasonal rate for a regular customer.

Clause (b) says that in the case of trade discounts the value of supply is the discounted price excluding the amount of tax, provided the tax invoice shows the discounted price and the related tax, and the discount allowed is in conformity with the normal business practices. Read that as three conditions. One, the discount is visible on the invoice. Two, the tax on the invoice is the tax on the reduced price. Three, the discount looks like something your trade normally does.

The third condition is the loose one, and it is where officers push back. What protects you is a written policy and a pattern. If your price list says any buyer taking fifty cartons gets ten percent off, and every such buyer gets it, that is normal business practice you can show. A one-off eighty percent cut to a single buyer, with nothing in writing, invites a question.

Clause (e) is FBR side of the bargain: where there is sufficient reason to believe the value has not been correctly declared in the invoice, the value is set by a Valuation Committee of trade and Inland Revenue members formed by the Commissioner.

FBR runs one simple check on every line. It takes the sales value excluding sales tax, applies the rate on that line, and compares the answer with the tax figure you sent. If they do not match, the line returns error 0104, which reads that the sales tax amount does not match the calculated amount. The discount field is not part of that sum.

A worked example. Your list price is Rs 100,000. You give a ten percent trade discount, so Rs 10,000 comes off and the buyer pays Rs 90,000 before tax. The correct line is: sales value excluding sales tax Rs 90,000, discount Rs 10,000 shown for the record, rate 18 percent, sales tax Rs 16,200. The invoice total is Rs 106,200.

The common mistake is to leave Rs 100,000 in the sales-value field, put Rs 10,000 in the discount box, and send Rs 16,200 as the tax. FBR then works out 18 percent of Rs 100,000, which is Rs 18,000, sees Rs 16,200 on the line, and rejects it. Your arithmetic was fine. The value you sent was the wrong one.

Two smaller rules catch people on the same field. A discount must never be negative, because every money field must be zero or more and a negative value returns error 0300. Money fields take two decimal places and quantity four, so round before you send or you invite error 0302. Every sum FBR applies is set out in How Sales Tax Is Calculated on an FBR Digital Invoice: The Formulas FBR Actually Validates.

A free item is not a discount. It is a supply made for no money, and the law treats it differently. Several parts of section 2(46) send such cases to the open market price, meaning what the same goods would fetch in an ordinary sale: payment in kind, supplies between associated persons for nothing or below market price, and, under clause (c), deals whose value is hard to work out at all.

Note what those words do not say. The associated-persons rule names related parties, such as a sister company or a family firm. It does not by itself force every giveaway to a walk-in customer to be billed at full market value. But clauses (c) and (e) leave FBR room to question any figure, so a valuable item shown at zero invites a question.

The safe and common way to handle a bonus deal is to price the whole consignment, not the free unit. Say you hand over ten cartons and charge for nine at Rs 500 each. The buyer pays Rs 4,500 and takes ten cartons. Bill all ten: quantity 10, sales value excluding sales tax Rs 4,500, which is Rs 450 a carton, tax at 18 percent Rs 810. Everything you delivered and everything you received is on the invoice, and nothing valuable is shown at zero.

Distributors and FMCG suppliers run these schemes constantly, and that trade is covered in FBR Digital Invoicing for Wholesalers, Distributors & FMCG in Pakistan. If a giveaway is large or unusual, ask your tax adviser before fixing its value. Do not invent a figure to make a line balance.

Third Schedule goods are the items taxed on the printed retail price instead of the price agreed between seller and buyer. For these, a discount changes the money you receive but not the tax. The tax figure must match the retail price multiplied by the rate, or the line returns error 0102, and the retail price field is mandatory or you get error 0090. Which items are on that list has moved recently, and the current position is in Third Schedule Goods Under FBR in 2026: New Categories, Footwear and Retail Price Rules.

If an invoice has already gone to FBR with the wrong discount, you cannot quietly edit your copy. Corrections are made on the IRIS portal within 72 hours of posting, each item can be edited only once, and all edits and cancellations in a month are capped at ten percent of the previous month total sales. Those rules are explained in FBR STGO 01 of 2026: Invoice Amendment, Cancellation & the 72-Hour Rule.

If the 72 hours have passed, or the discount was agreed after the sale, the right instrument is a credit note against the original invoice, not a fresh discounted one. It must reference the original, must not exceed its value or tax, and must be raised within 180 days. The mechanics are in Debit Notes and Credit Notes in FBR Digital Invoicing.

One last thing worth doing today. Write your discount policy down, even on one page: who gets what, at what volume, for how long. It costs nothing, and it is the part an officer cannot argue with.

Trade discount: a price reduction a seller gives a buyer as part of normal trading, such as a bulk or seasonal rate.

Value of supply: the amount the tax is charged on, defined in section 2(46) of the Sales Tax Act 1990.

Open market price: what the same goods would sell for in an ordinary sale between unconnected people.

IRN, or Invoice Reference Number: the unique number FBR gives an invoice once it accepts it. Without it the invoice is not a valid sales tax invoice.

Third Schedule goods: items whose sales tax is worked out on the printed retail price instead of the price actually charged.