The Federal Board of Revenue (FBR) has announced strict enforcement against textile spinning units that fail to install its video analytics monitoring system, known as the digital eye, at production facilities. The tax authority has instructed all field offices to ensure complete implementation and take extreme enforcement measures against non-compliant units. These measures may include sealing business premises, suspending sales tax registration, imposing financial penalties, blacklisting, restricting imports, and denying clearance for goods from production units.
Out of 421 registered spinning units in Pakistan, approximately 300 are currently operational. The FBR plans to install digital eye systems at these facilities to monitor undocumented cotton bales and prevent tax evasion. Officials emphasize that the spinning stage is a critical point in the textile supply chain for detecting untaxed cotton and ensuring compliance.
Electronic monitoring of spinning units was initially set to begin on November 1, 2025, but the deadline was extended to December 31 after delays. With the extended deadline now passed, the FBR is moving forward with enforcement. Non-cooperation from spinning units will trigger punitive action.
Pakistan’s textile sector consumes around 13 million cotton bales annually, with 5 to 6 million produced domestically and the rest imported. Approximately 9 million bales fall under the tax net, while the remainder is reportedly consumed without sales tax payment, commonly referred to as “Gol Maal.” The digital eye system aims to document previously unreported production and close this compliance gap.
The All Pakistan Textile Mills Association (APTMA) has resisted implementation of the system at the spinning stage. To support compliance, the FBR offered tax credits for installation expenses and formed a joint committee with APTMA representatives to oversee the rollout. Some units sought relief from the Lahore High Court, but no stay order was granted. With legal obstacles removed, the FBR is now determined to enforce the digital eye system and take action against any spinning units that refuse installation.
