Electronic production tracking system introduced to curb sales tax evasion
The Federal Board of Revenue has launched an electronic monitoring system for bottled water production aimed at preventing sales tax evasion and improving tax compliance in the sector.
In this regard, the FBR issued Sales Tax General Order (STGO) No. 3 of 2026 for the implementation of electronic monitoring at bottled water manufacturing facilities across the country.
The monitoring initiative has been launched under Section 40C(2) of the Sales Tax Act, 1990, read with Rules 150ZQR and 150ZQT of Chapter XIV-BA of the Sales Tax Rules, 2006.
According to the FBR, all registered persons involved in the production and packaging of bottled water, including toll manufacturers, are required to install an electronic production monitoring system with immediate effect.
The tax authority directed all relevant businesses to complete installation of the system by June 15, 2026.
Under the new framework, manufacturers will be required to install industrial barcode scanners, counting sensors, industrial computers, IP cameras, network video recorders, programmable logic controllers, LED displays, and uninterrupted power supply systems.
The monitoring setup will also include specialized production monitoring software capable of real-time tracking and transmission of production data to the FBR’s central control unit.
According to the order, the system must support real-time object detection and counting, quantitative production analysis, data archiving, detection of unexpected production stoppages, and analytics for legal enforcement actions.
The FBR said the monitoring systems would be supplied, installed, and maintained by vendors authorized by the board.
To ensure implementation, Chief Commissioners Inland Revenue have been directed to appoint dedicated focal persons to coordinate with bottled water manufacturers and authorized vendors.
Tax experts said the move is part of broader efforts by the FBR to digitize industrial monitoring and reduce underreporting of production and sales in sectors vulnerable to tax leakage.
They noted that electronic production monitoring has previously been introduced in industries such as sugar, tobacco, fertilizer, and cement to improve revenue collection and transparency.
The latest initiative reflects the government’s ongoing push toward documentation of the economy and technology-driven tax administration reforms.