FBR to Digitally Monitor Tobacco Sector to Curb Tax Evasion and Boost Revenue
November 13, 2025
ISLAMABAD – The Federal Board of Revenue (FBR) has launched a digital monitoring system for the tobacco industry to curb large-scale tax evasion and ensure accurate revenue collection.
Under this initiative, the FBR has directed cigarette manufacturing units and green leaf threshing (GLT) stations to install IP-based CCTV cameras at key production points. This move aims to provide real-time visibility of the entire production process, from raw tobacco to finished cigarettes.
According to Sales Tax General Order No. 7 of 2025, all tobacco manufacturers must ensure that no finished products are moved out of factories unless their production process has been fully recorded and monitored through these cameras.
Currently, CCTV cameras have been installed at all nine GLT stations across Pakistan — two managed by multinational companies and seven by local manufacturers. These installations will enable the FBR to track tobacco processing activity more effectively and ensure transparency in production data.
The FBR believes this digital enforcement step will help determine the actual production potential of cigarette manufacturers, closing loopholes that previously led to billions in lost taxes.
The government collects 18% sales tax on cigarettes under the Sales Tax Act 1990, while Federal Excise Duty (FED) is levied under the Federal Excise Act 2005 — both among the top 20 revenue-generating sectors for Pakistan. However, officials believe the current tax revenue from the tobacco industry is far below potential, estimating that actual tax collections could reach Rs600 billion annually if proper monitoring and compliance are ensured.
Field formations have been instructed to implement the monitoring system immediately, ensuring no factory operates outside digital surveillance.
With this step, the FBR aims to enhance transparency, improve tax compliance, and boost national revenue through better governance of the tobacco supply chain.
