The Federal Board of Revenue (FBR) has intensified crackdown on counterfeit goods to ensure compliance with digital tax stamp regulations on key commodities, including cigarettes, sugar, and fertilizers.
This initiative of the FBR aims to curb the nearly 63 percent market prevalence of counterfeit cigarettes and other goods that evade duties.
On a proactive mission, under the leadership of the FBR’s Member of Inland Revenue (Operations), regional tax offices (RTOs) were mobilized across major cities including Karachi, Lahore, Faisalabad, and Peshawar, as well as in the twin cities of Islamabad and Rawalpindi. These teams conducted comprehensive checks at various retail and wholesale points to verify the presence of government-mandated digital tax stamps on selected products.
One notable operation led to the sealing of Bobby Pan Shop located on Murree Road in Rawalpindi. The shop was reportedly involved in repeated violations pertaining to the sale of illegal and counterfeit cigarettes. This action mirrored similar enforcement measures taken across other key urban centers, where authorities seized illicit goods and sealed establishments found in violation of the new stringent rules.
This recent crackdown represents the second major enforcement drive under the Track-and-Trace System, following earlier directives from the FBR aimed at tightening controls over the illicit trade in these high-duty commodities. The Track-and-Trace System was originally implemented in the fiscal year 2021-22, covering five critical sectors with the goal of ensuring tax compliance and reducing fiscal losses from tax evasion.
Further strengthening these efforts, the FBR has set up the Inland Revenue Enforcement Network (IREN), a dedicated task force tasked with rigorous oversight responsibilities. These include monitoring stamping machines at production sites to ensure they function properly and verifying the application of tax stamps. IREN officers also respond to reports of unauthorized production stoppages and address any issues of operational failures, damage, or tampering with the Track-and-Trace System.
Moreover, IREN’s duties extend to meticulous inspections of tax stamps, stickers, and other labeling materials to confirm that they conform to prescribed specifications. Manufacturing lines that become non-operational are promptly secured with a security seal and recorded within the system to prevent unauthorized use.
Despite these enhanced measures, there have been ongoing concerns regarding the effectiveness of the IREN in fully curbing the trade in counterfeit goods. These concerns have prompted the FBR to issue further directives for a more concentrated crackdown on the illegal market activities.
As the Track-and-Trace System continues to evolve, its scope is set to expand further to encompass all imports and domestic productions within the designated sectors. By the close of fiscal year 2022-23, the FBR had reported that 20% of such goods were already under the system’s oversight, indicating significant progress in its implementation and a strong commitment to eradicating the shadow economy affecting these critical products.
