FBR Expands AI-Based Production Monitoring To Leather, Paper Sectors
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✧ GENERATE BRIEFING
The Federal Board of Revenue (FBR) has formally notified the expansion of its artificial intelligence-driven electronic production monitoring framework to the leather, paper, and paperboard sectors under S.R.O. 1751(I)/2026. Building on the computer-vision technology known as Digital Eye originally piloted in the cement industry the expansion aims to curb sales tax evasion, eliminate under-reported production, and align factory output with declared tax returns. Key regulatory, operational, and vendor parameters include: Regulatory Authority & Scope: Notified under Section 40C and Section 50(1) of the Sales Tax Act, 1990, read alongside Rule 150ZQR of Chapter XIV-BA of the Sales Tax Rules, 2006. Electronic monitoring applies immediately to all registered manufacturers across leather, paper, and paperboard manufacturing lines. Authorized Tech Consortium: The FBR has approved four tech providers ISSM Labelling Solutions (part of the wAI Industries group), Obsidian Technologies, Tollink Pakistan, and Authentik to deploy, operate, and maintain video analytics infrastructure across five total expansion sectors (including packaged tea, household electronics, and edible oil/ghee).
The Federal Board of Revenue (FBR) is expanding its digital production-monitoring framework to additional manufacturing industries, building on an artificial intelligence-based system known as Digital Eye, which was initially piloted in the cement sector to improve tax compliance and detect underreported production.
The latest expansion, notified through SRO 1751(I)/2026, brings the leather, paper and paperboard sectors into the monitoring framework. The FBR has authorised ISSM Labelling Solutions, Obsidian Technologies, Tollink Pakistan and Authentik to install and operate monitoring systems in designated industries.
Digital Eye Architecture and Computer Vision Integration
Digital Eye uses computer vision and video analytics to monitor production lines, count output and provide an independent record of manufacturing activity. The system was developed by Pakistani technology company wAI Industries with support from the UK-backed REMIT programme, addressing limitations associated with conventional physical stamps and manual monitoring.
The technology began as a pilot approximately three years ago in the cement industry. Following its deployment, the approach was extended to other sectors, including sugar and tiles, as the FBR sought more reliable production data to compare against manufacturers’ declared sales and tax returns.
Technical Protocols and Data Retention
Under the expanded framework, authorised vendors will install internet-protocol cameras and network video recorders at designated production lines. Footage will be retained for at least two months, allowing tax officials to compare observed output with reported figures and investigate discrepancies where necessary.
The government has highlighted the revenue potential of digital monitoring. The Finance Minister said in the budget speech that improved monitoring had helped save approximately Rs60 billion in the cement and sugar sectors. Separately, the government has reported that broader compliance measures helped recover Rs32 billion from the cement sector and contributed to a 31% increase in recorded sugar production during the latest crushing season. These outcomes reflect multiple measures, rather than Digital Eye alone.
Multi-Vendor Framework and Track and Trace Comparison
The framework is also moving towards a wider pool of technology providers. The addition of new authorised companies allows the FBR to consider systems tailored to industries with different machinery, production processes and compliance risks, rather than relying on a single provider.
Digital Eye is distinct from the FBR’s Track and Trace System. While Track and Trace uses tax stamps and identifying marks to follow products, Digital Eye independently observes production through video analytics. Comparing the two systems can help identify differences between factory output and declared quantities.
The FBR’s wider objective is to strengthen sales-tax compliance and improve revenue collection through automated monitoring. Prime Minister Shehbaz Sharif has also directed officials to complete production-monitoring coverage across manufacturing sectors by the end of 2026.
The system’s effectiveness will depend on accurate monitoring, consistent enforcement, fair treatment of businesses and safeguards for confidential commercial information. The expansion marks a shift from a targeted industrial pilot towards a broader digital framework for tax administration.
