The Federal Board of Revenue (FBR) has announced a significant step toward enhancing transparency and compliance within Pakistan’s commercial sector by mandating digital system integration for large distributors and retailers. Under the latest directive, entities that fall within specific tax thresholds are now required to link their operational systems directly with FBR’s digital monitoring network. According to the notification, distributors with monthly withholding tax exceeding Rs. 100,000 and retailers surpassing Rs. 500,000 must integrate their systems with the FBR database to ensure real-time monitoring of transactions and prevent underreporting.
This development, formalized through SRO 2071(I)/2025, was issued in Islamabad on Tuesday under the provisions of the Sales Tax Act, 1990, and amendments to Rule 150Q of the Sales Tax Rules, 2006. The measure also draws its authority from Sections 236G and 236H of the Income Tax Ordinance, which pertain to advance tax collection on sales to distributors, wholesalers, and retailers. Through this integration, FBR aims to bring greater visibility to commercial transactions, curbing the long-standing issue of tax evasion and improving the accuracy of reporting within the supply chain.
An FBR official stated that the initiative is part of a broader government agenda focused on strengthening documentation and promoting transparency in financial operations. By mandating integration, FBR seeks to transition toward a more data-driven and digitally connected taxation framework that aligns with international best practices. This will allow authorities to monitor high-value transactions in real time, ensuring that businesses operating within Pakistan’s retail and distribution sectors meet their tax obligations efficiently. The integration also minimizes human intervention in record keeping and verification processes, reducing the chances of discrepancies and manipulation in tax filings.
The move marks a continued effort by FBR to digitize tax administration systems and build public trust in the country’s regulatory framework. Over the past few years, the agency has launched multiple technology-driven initiatives to modernize tax collection, such as real-time point-of-sale (POS) integration, electronic invoicing, and digital audit trails. The latest decision reinforces FBR’s strategy to create a transparent tax ecosystem that benefits both the government and the business community. With enhanced visibility and compliance mechanisms in place, Pakistan’s tax authorities expect to improve revenue generation and strengthen overall economic governance through digital transformation.
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