The Federal Board of Revenue (FBR) has decided to take strict action against textile spinning units that fail to install its video analytics monitoring system, known as the “digital eye,” at their production facilities.
The tax authority has instructed its field offices across the country to ensure full implementation of the system. Units that do not comply may face strong enforcement measures, including import bans, sealing of factories, suspension of sales tax registration, financial penalties, blacklisting, and refusal of clearance for goods produced at their facilities.
Out of 421 registered spinning units in Pakistan, around 300 are currently operational. The FBR plans to install the digital monitoring system at all active units to track the movement of cotton bales and prevent tax evasion. Officials consider the spinning stage a critical point in the textile supply chain, where undocumented or untaxed cotton can be detected.
The FBR had originally set November 1 as the deadline to begin electronic monitoring. After missing that date, the deadline was extended to December 31, 2025. As the revised deadline has also passed, the authority has now decided to move ahead with strict enforcement.
Pakistan’s textile industry uses around 13 million cotton bales each year. Of these, about 5 to 6 million bales are produced locally, while the rest are imported. Officials estimate that roughly 9 million bales are documented within the tax system, while the remaining quantity is consumed locally without payment of sales tax. This undocumented cotton is often referred to in the industry as “Gol Maal.”
The FBR aims to use video analytics technology to close this gap and bring previously unreported production into the tax net.
According to officials, the All Pakistan Textile Mills Association (APTMA) has opposed the installation of the monitoring system at the spinning stage. To encourage compliance, the FBR offered a tax credit to units for expenses related to installing the system. A joint committee, made up of representatives from both the FBR and APTMA, was also formed to oversee the process.
Some spinning units approached the Lahore High Court seeking relief. However, the court did not issue a stay order against the implementation of the monitoring system.
With legal challenges cleared, officials say the FBR is now determined to enforce the digital eye system and take action against any unit that refuses to comply.
