The Federal Board of Revenue (FBR) on Thursday blocked refunds worth more than Rs6 billion belonging to taxpayers who failed to comply with digital monitoring initiatives, industry sources confirmed. This marks the first time refunds have been withheld over non-compliance with such measures.
Under powers granted through the Finance Act 2026, the FBR can now impose heavy penalties on units resisting digital initiatives such as video monitoring and video analytics at specified sectors.
In the first phase of enforcement, the FBR system halted refunds exceeding Rs6 billion for units that had not complied with production monitoring requirements.
Officials said the next phase would involve suspension of registrations and an embargo on imports for non-compliant businesses. Business premises could be sealed and finished products confiscated as part of the crackdown.
Units and factories that continue to refuse installation of production monitoring systems by July 31, 2026 will face further punitive action. This includes an embargo on imports, penalties, sealing of premises, suspension of sales tax registration, blacklisting and a halt on clearances from production sites.
Digital monitoring has already been rolled out in the tobacco, cement, sugar, fertilizer and tiles sectors, where production monitoring systems are largely in place. Installation is currently underway in the iron and steel, packaged milk, beverages and textile sectors.
Alongside enforcement, the FBR has pursued what it calls a carrot and stick approach, releasing Rs43 billion in refunds during June 2026 and nearly Rs600 billion over the course of 2025-26.
Non-compliant units, however, remain at risk of penalties, suspension of sales tax registration and removal from the green channel facility at the import stage.
