New sales tax directive requires tyre manufacturers to install digital monitoring systems at curing presses and finishing lines to track production and prevent unmonitored removal of tyres.
The Federal Board of Revenue (FBR) has ordered all registered tyre manufacturers in Pakistan to install and operationalize electronic production monitoring systems by November 30, 2026, as part of efforts to strengthen tax compliance and improve transparency in the tyre sector.
Through Sales Tax General Order No. 32 of 2026, issued by Inland Revenue Operations, the FBR has made electronic monitoring mandatory for all registered persons involved in tyre manufacturing. The directive has been issued under the relevant provisions of the Sales Tax Act, 1990, and Sales Tax Rules, 2006.
Under the new requirements, manufacturers must install specialized hardware and software at every curing press and takeaway conveyor or finishing line within their production facilities. These systems will automatically count cured tyres, distinguish genuine production cycles from maintenance, warm-up and dry cycles, and identify green (uncured) tyres.
The monitoring system will also identify individual tyre stock keeping units (SKUs) using approved master data, including diameter, width, tread design or pattern, and weight. Only solutions offered by FBR-authorized vendors will be accepted for implementation.
The FBR has directed manufacturers to complete the installation, integration and operationalization of the required systems by November 30, 2026. Necessary arrangements must include hardware, software, internet connectivity, power supply and access to the required infrastructure.
The authorized monitoring solutions must also record production activities in real time and securely transmit information to the Board’s Central Control Unit. Additionally, the systems must detect unexpected production stoppages, equipment failures, tampering, interruptions and attempts to bypass monitoring mechanisms.
Manufacturers will also be required to maintain audit records and provide production dashboards, reports and analytical data to support tax monitoring, reconciliation and enforcement.
Importantly, the FBR has clarified that tyre manufacturers cannot remove tyres from their business premises unless the production has been electronically monitored under the prescribed rules. Registered manufacturers must also provide the required IT infrastructure, connectivity and power supply and pay applicable monitoring fees and charges.
To ensure implementation, Chief Commissioners Inland Revenue will appoint dedicated focal persons to coordinate with manufacturers, authorized vendors and the FBR.
The Board has further directed field formations to identify all tyre manufacturers, including businesses missing from the attached jurisdiction-wise list, and bring them under the monitoring framework.