FBR blocks over Rs6 billion refunds of businesses resisting digital monitoring

For the first time, the Federal Board of Revenue (FBR) has blocked refunds of more than Rs6 billion claimed by taxpayers who failed to comply with its digital monitoring requirements, including production surveillance at business premises, Business Recorder reported, citing industry sources. 

The tax authority has expanded enforcement powers under the Finance Act 2026 and is moving to implement digital measures, including video monitoring systems and video analytics, across specified sectors.

In the first phase, the FBR system stopped refunds of units that had not installed production monitoring systems or complied with other digital requirements.

Further enforcement measures are planned for the next phase. These include suspension of registrations, restrictions on imports, sealing of business premises and confiscation of finished goods.

Units that continue to resist installation of production monitoring systems by July 31, 2026, may also face penalties, blacklisting, suspension of sales tax registration and restrictions on removal of goods from production premises.

The FBR has already introduced production monitoring in the tobacco, cement, sugar, fertiliser and tiles sectors. Installation is underway in iron and steel, packaged milk, beverages and textiles.

The tax authority has paired enforcement with accelerated refund payments. It paid Rs43 billion in refunds during June 2026 and nearly Rs600 billion during July-June FY2025-26.

Non-compliant importers may also be removed from the customs green channel, while other penalties could include suspension of sales tax registration and restrictions at the import stage.