The Federal Board of Revenue (FBR) has authorised four companies, including ISSM Labelling Solutions (Private) Limited, to supply, install, operate, maintain and repair electronic production monitoring equipment at manufacturing facilities across five major sectors.
The other authorised vendors are Obsidian Technologies, Tollink Pakistan (Pvt.) Ltd. and Authentik.
The approval, issued under Chapter XIV-BA of the Sales Tax Rules, 2006, covers packaged tea, household electronics, paper and paperboard, edible oil and ghee, and leather.
The move expands the electronic production monitoring framework that the FBR has been introducing sector by sector since 2025 with the objective of reducing discrepancies between actual industrial output and production declared for sales tax purposes.
Under the system, authorised vendors will install Internet Protocol (IP) cameras and Network Video Recorders (NVRs) on designated production lines. The cameras are required to continuously monitor production processes in real time, while the NVRs must record the footage and retain it for at least two months.
Equipment installed at each manufacturing site will have to be tested against FBR-approved technical specifications. The authorised vendors will also be required to provide the tax authority with access to both live camera feeds and stored recordings.
The FBR has stipulated that all footage generated under the system will remain the property of the Board, must be treated as confidential and cannot be shared with any third party except on the FBR’s instructions.
However, actual deployment in each newly notified sector will begin only after the FBR issues the relevant Sales Tax General Order (STGO).
The phased approach follows the mechanism adopted for sectors already brought under electronic monitoring. STGO 08/2025 introduced monitoring for the spinning segment of the textile sector, while STGO 04/2026 covered packaged juices. STGO 07/2026 subsequently extended the framework to aerated waters and beverages, including toll manufacturers, with installation deadlines prescribed following issuance of the orders.
Separately, the FBR’s Stage-I technical evaluation for the paper and paperboard sector, issued under Bid Reference 7(1)/IR/TDU/2026, has outlined a phased implementation schedule.
Under the plan, at least 20 per cent of production lines are to be covered by November 15, 2026, followed by 50 per cent by December 15 and full coverage by December 31, 2026.
Sales Tax General Orders for the iron and steel sector and poultry hatcheries are also expected shortly. Their issuance would pave the way for installation of electronic monitoring systems in those segments and further expand the number of industries actively covered by the regime.
ISSM Labelling Solutions, part of the wAI Industries group, has already operated as an FBR-authorised production monitoring vendor in several sectors covered by the framework.
The company has undertaken deployments in cement, sugar, tiles, textiles and beverages. It says its visual analytics platform has been installed at more than 300 manufacturing plants across Pakistan, while work is also under way in steel and iron, edible oil and ghee, leather, packaged tea, tyres and hatcheries.
The newly notified sectors, therefore, represent an expansion of its existing footprint rather than its entry into the production monitoring business.
The other approved companies bring experience in digital labelling, authentication and track-and-trace technologies. Manufacturers falling within the notified sectors will be required to procure their monitoring systems from one of the approved vendors, placing the four companies in direct competition for installations at factory level.
The electronic production monitoring mechanism is designed to enable tax authorities to compare manufacturing activity captured through cameras and analytics with production volumes declared in sales tax returns.
Material discrepancies could lead to further verification, audit or enforcement proceedings, subject to applicable laws, supporting documentation and explanations submitted by taxpayers.
Electronic production monitoring is separate from the FBR’s Track and Trace System. While production monitoring uses cameras and analytical technologies to record manufacturing activity on production lines, the Track and Trace System uses tax stamps and unique identification markings to verify products and monitor their movement through the supply chain.
The expansion forms part of broader tax administration reforms aimed at improving documentation and revenue collection. Production monitoring, digital invoicing and strengthened taxpayer audits have all been identified as important tools for improving the accuracy of sales tax declarations and strengthening revenue mobilisation.
Industry representatives, however, have previously raised concerns over whether the monitoring framework will be applied uniformly across documented, small-scale, toll and unregistered manufacturers.
Similar concerns could emerge in sectors such as leather and paper and paperboard, where significant manufacturing activity exists outside the fully documented segment of the economy.
The effectiveness of the expanded monitoring regime will ultimately depend on consistent implementation across the industry, adequate protection of confidential commercial information contained in recorded footage, and the extent to which monitoring data is used for evidence-based tax assessments rather than merely generating a larger volume of compliance alerts.
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