The Federal Board of Revenue has intensified enforcement measures against textile spinning units that have not yet installed the mandatory video analytics system, commonly referred to as the Digital Eye. The initiative targets the monitoring of undocumented cotton bales within the spinning segment of Pakistan’s textile industry, with authorities signaling strict compliance actions against non compliant units.
According to officials, around 300 out of 421 registered spinning units are currently operational and fall within the scope of this directive. FBR has instructed its field formations to ensure full implementation of the Digital Eye system across these units. The system is designed to monitor the movement and consumption of cotton bales in real time, aiming to curb the circulation of what is locally described as undocumented cotton, often referred to as Gol Maal. Industry data suggests that textile units consume approximately 13 million cotton bales annually, while only about 9 million are reflected within the tax net. The remaining 4 to 5 million bales are either locally consumed without payment of sales tax or imported without proper documentation, creating a significant gap in revenue collection.
The enforcement drive follows the expiry of the extended compliance deadline. The initial deadline for installation was set for November 1, 2025, and later extended to December 31, 2025. With the extension period now over, Federal Board of Revenue has moved to implement the system irrespective of resistance from certain industry stakeholders. Reported penalties for non compliance include import embargoes, sealing of business premises, suspension of sales tax registration, blacklisting, and even production suspensions. Authorities have communicated that these measures will be applied where units fail to integrate the monitoring infrastructure into their operations.
To address concerns regarding financial burden, FBR has assured textile units that expenses incurred on installing the video monitoring system will qualify for a tax credit. A joint committee has also been formed to oversee implementation and resolve operational issues during the transition phase. Earlier, All Pakistan Textile Mills Association opposed the installation of video analytics at the spinning stage and challenged the move legally. However, the Lahore High Court did not grant a stay order against the enforcement, allowing the tax authority to proceed with implementation. The latest action reflects FBR’s broader push to enhance documentation, strengthen tax compliance, and improve transparency within Pakistan’s textile supply chain.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
