When Must You Issue an FBR Digital Invoice? Time of Supply, Advance Payments and the Whichever-Is-Earlier Rule (2026)

This page answers one question: when exactly must you issue an FBR digital invoice? It explains the legal rule called time of supply, what it means when a customer pays an advance, and how to handle part payments, credit sales and services without breaking the rule.

The rule is short. Under Section 2(44) of the Sales Tax Act 1990, a sale of goods takes place at the time the goods are delivered or made available to the buyer, or the time you receive any payment for them, whichever is earlier. The Finance Act 2024 put the payment part back into the law from 1 July 2024. FBR's own digital invoicing FAQ (question 20) repeats it word for word: digital invoices shall be issued at the time of supply, i.e. receipt of payment or delivery of goods, whichever is earlier. So an advance payment starts the clock, not just the delivery.

Why it matters: an FBR digital invoice reaches FBR the moment you post it, and FBR records that time. Section 23 of the Act requires the tax invoice at the time of supply, and a late invoice can be penalised under Section 33. Mistakes can only be corrected inside the 72-hour window set by STGO 01 of 2026. Getting the timing right on day one is cheaper than fixing it later.

For goods sold in the normal way, time of supply is the earlier of two events: (1) you deliver the goods or make them available for the buyer to collect, or (2) you receive any payment for them, in full or in part. Whichever happens first is the date of supply, and the digital invoice must be issued then.

For goods sold under a hire purchase agreement (an instalment deal where the buyer uses the goods now and owns them after the last payment), time of supply is the date the agreement is signed, not each instalment. For services under federal sales tax, such as services in Islamabad Capital Territory, time of supply is the time the service is rendered or provided. Services taxed by a province (Sindh, Punjab, KP, Balochistan) follow that province's own law and its own timing rule. 'Does FBR Digital Invoicing Apply to Services? Goods vs Services Explained (2026)' and 'FBR vs Provincial (SRB/PRA/KPRA) E-Invoicing: Which System Do Service Businesses Report To? (2026)' explain which system you report to.

The law adds one proviso (an extra condition attached to a rule): where any part payment is received, it is accounted for in the sales tax return for the tax period (the month) in which it was received. In plain words, the tax on an advance belongs to the month you got the advance. Accountants should know the history, because clients still quote old advice: the payment rule applied up to 2007, came back with the Finance Act 2013, was removed by the Finance Act 2021, and was restored by the Finance Act 2024. Today it applies.

Case 1, booking advance. A customer books a sofa set, a car or a stitched suit and pays Rs 20,000 now against a Rs 100,000 price. You received a payment, so time of supply has arrived for that sale. The safe, common practice is to issue a digital invoice for the Rs 20,000 (value plus sales tax) on the day you receive it, and a second invoice for the remaining Rs 80,000 on the day you deliver. Both invoices go to FBR and each gets its own IRN (Invoice Reference Number, the unique number FBR gives every invoice).

Case 2, full payment before delivery. Time of supply is the payment date. Issue the full invoice that day, even if the goods leave your store next week. Case 3, credit sale. You deliver today and the buyer pays in 30 days. Time of supply is the delivery date. Issue the invoice with the delivery, not when the money arrives. Case 4, instalments after delivery. Delivery already fixed the time of supply, so the full invoice was due at delivery; later instalments do not need new invoices.

Case 5, the deal falls through. If you invoiced an advance and the customer then cancels and you refund it, you do not delete the invoice. FBR keeps every posted invoice. You issue a credit note that points back to the advance invoice, following 'Debit Notes and Credit Notes in FBR Digital Invoicing'. Sectors where advances are normal, such as those in 'FBR Digital Invoicing for Car Dealers & the Automobile Sector in Pakistan (2026)', 'FBR Digital Invoicing for Furniture & Home Furnishing Shops (2026)' and 'FBR Digital Invoicing for Construction: Builders, Developers & Building-Material Suppliers (2026)', should build this two-invoice habit into their booking process.

Can you post an invoice with an earlier date? The FBR system accepts an invoice date that is on or before today, but never a future date (error code 0043). An old date does not hide a delay, because FBR also records when the invoice actually reached its server. A buyer who needs the input tax in a given month may also lose it if your invoice arrives after that month's return.

What if the internet is down or the FBR server does not respond? FBR's FAQ (question 15) says the registered person and the licensed integrator must still follow the Act and the Rules in such cases. In practice: keep the sale details, retry as soon as the connection is back, and keep proof of the outage. Do not wait days. If a posted invoice carries a wrong date, value or buyer, fix it within 72 hours as explained in 'FBR STGO 01 of 2026: Invoice Amendment, Cancellation & the 72-Hour Rule'; after that you need the Commissioner's approval. 'FBR Digital Invoicing Error Codes: The Complete Reference (0001–0402)' lists the date and value errors FBR returns.

Timing also decides your monthly return. Posted invoices flow into Annexure-C of the return for the month of the invoice date. An advance invoiced in September sits in September's return, and its tax is paid with that return, even if delivery is in October. 'How Digital Invoicing Feeds Your Sales Tax Return (Annexure-C) in 2026' shows the flow.

Step 1: the moment money arrives for a future supply, whether cash, bank transfer or mobile wallet, raise a digital invoice for that amount the same day, and print the IRN and QR code on the receipt you hand over. Step 2: at delivery, raise the invoice for the balance and attach the delivery challan (the paper that travels with the goods) showing both invoice numbers. Step 3: for credit sales, invoice at delivery, not at payment. Step 4: if a booking is cancelled, refund and raise a credit note against the advance invoice. Step 5: before the return due date, check that every invoice dated last month is in Annexure-C.

On Digi Invoice each posted invoice sits in a ledger with its IRN, invoice date and FBR posting time, so you can see which advances still have a balance invoice to come. You can practise the two-invoice flow in the sandbox (FBR's free test system where invoices do not count as real) before your first live booking. 'Invoice Reference Number (IRN) in FBR Digital Invoicing' explains the number your customer will see on both receipts.

Time of supply — the legal moment a sale is treated as made for sales tax. For goods it is delivery or payment, whichever is earlier.

Advance or part payment — money received before the goods are delivered. Under the current law it starts the time of supply.

Tax period — the month covered by one sales tax return. The tax on an advance belongs to the month the advance was received.

Hire purchase — an instalment agreement where the buyer uses the goods now and owns them after the last payment. Time of supply is the date the agreement is signed.

IRN (Invoice Reference Number) — the unique number FBR gives every digital invoice. The advance invoice and the balance invoice each get their own IRN.