The Federal Board of Revenue (FBR) has decided to initiate strict enforcement action against textile spinning units that refuse to install its video analytics monitoring system, commonly referred to as the “digital eye,” at their production facilities.
The tax authority has directed all its field formations to ensure full implementation of the video monitoring system and to proceed with “extreme enforcement measures” against non-compliant units.
These measures may include import embargoes, sealing of business premises, suspension of sales tax registration, financial penalties, blacklisting, and denial of clearance for goods from production facilities.
Out of 421 registered spinning units in the country, around 300 are currently operational. The FBR plans to fully install digital eye systems at these facilities to monitor the movement of undocumented cotton bales and curb tax evasion.
The tax authority considers the spinning stage a key choke point in the textile supply chain for detecting and preventing the use of untaxed cotton.
The FBR had initially announced that electronic monitoring of textile spinning units would begin from November 1. After missing the first deadline, the authority extended the compliance date to December 31, 2025. However, the second deadline has also expired, prompting the FBR to move forward with enforcement.
Officials said non-cooperation from spinning units will now trigger punitive measures.
Targeting Undocumented ‘Gol Maal’ Cotton
Pakistan’s textile sector consumes approximately 13 million cotton bales annually. Of these, 5 to 6 million bales are produced locally, while the rest are imported.
Around 9 million bales are reportedly within the tax net, while the remaining quantity is believed to be locally consumed without payment of sales tax, commonly referred to as “Gol Maal” in industry parlance.
The FBR aims to use video analytics to plug this gap and document previously unreported production.
Officials said the All Pakistan Textile Mills Association (APTMA) has resisted the implementation of the video analytics system at the spinning stage.
To facilitate compliance, the FBR had offered a tax credit facility to spinning units for expenses incurred on installing the system. A joint committee comprising representatives from the FBR and APTMA was also formed to oversee implementation.
However, some units approached the Lahore High Court seeking relief. The court did not grant a stay order against the installation of the monitoring system.
With legal hurdles cleared, officials said the FBR is now determined to enforce the system “at any cost” and proceed against units that fail to install the digital eye technology.
