A box under the desk. A drawer full of faded receipts. A hard drive you are afraid to open. If an FBR auditor walked in tomorrow and asked for your records from six years ago, could you produce them? Most businesses cannot — not because they are hiding anything, but because they never knew what the six-year rule actually requires.
The facts, in short
- Retention period: Six years from the end of the relevant tax year.
- Applies to: Books of account, invoices, vouchers, bank statements, returns, and supporting documents.
- Format: Paper or digital — both are acceptable.
- Cost of non-compliance: Disallowed expenses, estimated income, penalties.
Where the six-year rule comes from
Under Pakistan's Income Tax Ordinance and Sales Tax Act, every person required to file a return must maintain books of account and supporting documents. These must be retained for six years from the end of the tax year to which they relate. So records for Tax Year 2020 must be kept until at least the end of Tax Year 2026.
The rule exists because FBR can go back and verify a return years after it was filed. If you cannot support what you declared, the burden shifts to you.
What you must keep
- Sales invoices and tax invoices issued
- Purchase invoices and expense receipts
- Bank statements and reconciliation statements
- Payment vouchers and receipt vouchers
- Contracts and agreements with suppliers and customers
- Stock and inventory records
- Salary and payroll records
- Copies of filed tax returns and wealth statements
- FBR challans and payment proofs
- Any document supporting an entry in your books
What you can safely discard
Not every piece of paper in your office is a tax record. You can discard:
- Internal memos and draft emails with no tax relevance
- Old catalogues, brochures, and marketing flyers
- Duplicate copies of documents you already have filed
- Routine operational correspondence unrelated to transactions
If in doubt, keep it. The cost of storing a document is lower than the cost of not having one when an auditor asks for it.
Paper vs digital: what works
Digital records are fully acceptable to FBR as long as they are complete, accurate, and producible on request. A scanned invoice is just as valid as a paper one — provided it is readable, not altered, and backed up.
The hybrid trap is worse than either extreme: half your invoices in a filing cabinet, half in an email inbox, half in WhatsApp. When an auditor asks for a specific document from three years ago, you need to know exactly where to find it.
Pick one system. Scan everything. Back it up. Label it by tax year.
A simple system that works
- Create folders by tax year. One folder per year, not one folder for everything.
- Scan as you go. Do not wait until year-end to digitize a year's worth of paper.
- Name files consistently. "2025-07-Invoice-ABC-Traders.pdf" beats "scan001.pdf" every time.
- Back up automatically. One laptop failure should not cost you six years of records.
- Review annually. At the end of each tax year, confirm the previous year's folder is complete before you move on.
Stop hoarding. Start organizing.
We will help you set up a record-keeping system that satisfies FBR without burying you in paper — digital, searchable, and audit-ready.
Frequently asked questions
How long must I keep business records in Pakistan?
Six years. Under the Income Tax Ordinance and Sales Tax Act, you must retain books of account, invoices, vouchers and supporting documents for six years from the end of the tax year to which they relate.
What exactly counts as a record I must keep?
Sales and purchase invoices, bank statements, payment vouchers, receipts, contracts, stock records, salary records, tax returns, wealth statements, and any document supporting an entry in your books.
Can I keep records digitally instead of paper?
Yes. Digital records are acceptable as long as they are complete, accurate, and can be produced on request. Scanned copies are fine — just make sure they are readable and backed up.
What happens if I cannot produce records during an FBR audit?
FBR can disallow your expenses, estimate your income, and impose penalties. Missing records are one of the most common reasons audits go badly.