FBR expands digital sales tax enforcement, allowing taxable goods and conveyances to be seized for bypassing prescribed monitoring systems.
ISLAMABAD: The Federal Board of Revenue (FBR) has been empowered to seize and confiscate taxable goods manufactured, produced, transported or supplied without complying with prescribed digital production monitoring and identification requirements.
The FBR explained the measure in Sales Tax Circular No. 1 of 2026, issued to clarify major amendments to the Sales Tax Act, 1990 introduced through the Finance Act, 2026.
The changes involve the substitution of sub-sections (2), (3) and (6) of Section 40C, strengthening enforcement against registered persons who fail to comply with prescribed production monitoring and tracking systems.
FBR expands digital monitoring of taxable goods
According to the FBR, the amendments expand the scope of monitoring through production monitoring systems, video analytics and other prescribed monitoring mechanisms.
Manufacturers will be prohibited from removing or selling goods unless the required tax stamps, banderoles, stickers or labels have been affixed and the goods are monitored through the prescribed production monitoring system, video analytics or another mechanism notified by the Board.
The requirement will also apply to persons other than manufacturers. However, the FBR will determine the date and the form, style and manner in which the requirements will become applicable to them.
The FBR said the amendment is aimed at discouraging undocumented and unrecorded transactions while improving the monitoring of taxable goods throughout the supply chain.
FBR gets powers to seize and confiscate goods
The newly added sub-section (6) gives the department powers to seize and confiscate taxable goods for which monitoring, tracking or identification has been prescribed under the Sales Tax Act or the rules made under it.
The enforcement powers will apply where goods are manufactured, produced, removed, transported, supplied or otherwise dealt with without the prescribed tax stamps, banderoles, stickers, labels or barcodes.
The powers will also apply where taxable goods are handled without complying with the required production monitoring, tracking or identification system.
Conveyances can also face confiscation
The conveyance used for the movement, carriage or transportation of such goods may also be seized and confiscated under the amended provisions.
The measure therefore extends enforcement beyond the goods themselves, allowing action against vehicles or other conveyances used to transport taxable goods in breach of the prescribed monitoring and identification requirements.
FBR strengthens technology-driven enforcement
The FBR said the enhanced framework is intended to strengthen digital monitoring, improve documentation and prevent the movement of goods outside the formal tax system.
The measure represents a further expansion of the FBR’s technology-driven sales tax enforcement strategy, under which the production, movement and supply of taxable goods can increasingly be monitored through digital systems and automated identification mechanisms.