FBR Digital Invoicing for Leather Tanneries and Leather Goods Makers in Pakistan (2026)

This page explains FBR digital invoicing for leather tanneries and for makers of leather jackets, gloves, bags and belts. It shows the tax rate, the HS codes to use, how local and export sales differ, and one full invoice example.

A registered tannery or leather goods maker charges 18% sales tax on local sales and 0% on exports. Every sale, local or export, must be posted to FBR in real time. Under SRO 1852(I)/2025 (dated 24 September 2025), the last group of sales tax registered businesses had to be live by 31 December 2025. Since the Finance Act 2026, a business that is still not integrated can face penalties and loss of input tax.

Most leather lines use a few HS codes (an 8-digit product number that tells FBR what you sold): 4104 to 4107 for tanned and finished hides and skins, 4113 for leather of other animals such as goat, 4203 for leather garments, gloves and belts, and 4202 for bags and wallets. Leather shoes are under chapter 64.

This guide is general information, not tax advice. Rates and rules can change, so confirm your case with FBR or your tax adviser.

Tanneries. A tannery turns raw hides into finished leather, so for sales tax it is a manufacturer. Manufacturers were among the first groups named for digital invoicing. 'FBR Digital Invoicing for Manufacturers and Factories in Pakistan (2026)' explains what that means. The big tannery clusters are in Kasur, Korangi (Karachi), Sialkot and Lahore.

Leather goods makers. Units that make jackets, gloves, bags or belts must post every sale with an IRN (Invoice Reference Number — the unique number FBR gives every invoice) and a QR code, if they hold an STRN (Sales Tax Registration Number). This includes sales to local shops and to other factories.

Exporters. Most Pakistani leather is exported. Exports are zero-rated (taxed at 0%, so no sales tax is charged), but the export sale still goes through digital invoicing and still gets an IRN. Leather was one of the five export sectors that once had zero-rating on local supplies too. That ended in 2019, so a tannery selling leather to a local exporter now charges the normal 18%.

Shoe makers and shops. If you make or sell finished shoes, see 'FBR Digital Invoicing for Footwear & Shoe Shops (2026)' as well.

Use the right unit. FBR checks the UoM (unit of measurement — the unit the quantity is counted in). Leather is often sold by square foot, but FBR's list uses units such as square metre, kilogram, pair and piece. Change square feet to the unit FBR allows for that HS code, or the invoice is rejected. One square metre is about 10.76 square feet. Gloves are usually counted in pairs. 'UoM in FBR Digital Invoicing: Picking the Right Unit of Measurement (2026)' explains the list.

Pick the right sale type. A local sale to a registered buyer is usually scenario SN001, and to an unregistered buyer SN002, where further tax (an extra tax, commonly about 4% of the value before sales tax) may apply on top of the 18%. An export sale is posted under the zero-rate scenario (SN007) at 0%. A scenario is FBR's name for one type of sale, and you test each one in the sandbox (FBR's free practice system where test invoices do not count as real). 'Registered vs Unregistered Buyers on FBR Invoices: Registration Type, Further Tax and ATL Checks' explains the buyer type.

Worked example. A Kasur tannery sells 5,000 square feet of finished cow leather (HS 4107) at Rs 300 per square foot to a registered jacket maker in Sialkot. That is about 464.5 square metres. Value before tax: 5,000 x Rs 300 = Rs 1,500,000. Sales tax at 18%: Rs 270,000. Invoice total: Rs 1,770,000. The software sends this to FBR, gets the IRN back in seconds, and prints it with the QR code and the FBR Digital Invoicing logo.

Why the buyer cares. The jacket maker can claim that Rs 270,000 as input tax (tax paid on purchases that you can take off your own tax bill) only if your invoice is posted to FBR. When the jacket maker exports the jackets at 0%, that input tax is what they claim as a refund.

Refunds held up. Exporters claim refunds of the input tax on leather, chemicals and power. If a supplier did not post their invoice, the refund claim can be held. 'Sales Tax Refunds After Digital Invoicing (2026): FASTER, Annexure-H and the 72-Hour Rule' explains the checks. Ask every supplier for the IRN.

Mixing local and export sales. Keep export invoices and local invoices apart, with the right scenario on each. A local sale posted as 0% is a costly mistake. 'Zero-Rated vs Exempt Invoices in FBR Digital Invoicing' shows why 0% and exempt are not the same.

Grades and rejects. Leather is sold in grades, and rejected pieces are often sold cheaply. Each sale, even of rejects, still needs a posted invoice. Save each grade as its own item so the HS code, unit and rate fill the same way every time.

Digi Invoice lets you save leather, glove and garment items with their HS code, unit and rate once. Each sale is checked before it goes to FBR, posted in real time, and printed with the IRN, QR code and FBR logo. You can start in the sandbox with a free account on the register page, and 'How to Register for FBR Digital Invoicing (2026): Step by Step on IRIS' shows the IRIS steps (IRIS is FBR's online tax portal).

HS code — an 8-digit product number that tells FBR exactly what you sold.

Zero-rated — taxed at 0%, as with exports, so no sales tax is charged but input tax can still be claimed back.

Input tax — sales tax you paid on your purchases, which you can take off the tax you owe.

Scenario — FBR's name for one type of sale, such as SN001 (registered buyer) or SN007 (zero-rated).

IRN (Invoice Reference Number) — the unique number FBR gives every invoice it accepts.