Cigarette factories under watch: FBR enforces real-time CCTV monitoring

The Federal Board of Revenue (FBR) has launched a new digital monitoring system for the tobacco industry, aiming to curb rampant tax evasion and bring greater transparency to cigarette production across the country.

Under the latest directive, all tobacco manufacturers have been instructed to install IP-based CCTV cameras at key stages of their production facilities, including green leaf thrashing (GLT) stations and factory floors. The move, announced through Sales Tax General Order No. 7 of 2025, seeks to ensure real-time oversight of tobacco processing and cigarette manufacturing.

Cameras to track every stage of production

Officials said the cameras would provide a live feed to FBR’s central monitoring system, allowing authorities to track the quantity and flow of tobacco processed and cigarettes produced. The system is designed to prevent companies from underreporting their output to avoid taxes.

According to the FBR, cameras have already been installed at all nine GLT stations nationwide. Two of these units are run by multinational firms, while seven are locally owned. These stations handle the initial stage of tobacco processing, and officials believe monitoring them will make it easier to assess the industry’s real production capacity.

The new rules also prohibit manufacturers from moving finished products out of factory premises unless the entire production process has been recorded through the CCTV system. This means that every cigarette leaving a factory will have a digital audit trail.

Aiming for higher revenue from tobacco

Pakistan’s tobacco industry contributes significantly to government revenue through sales tax and Federal Excise Duty (FED). Cigarettes are taxed at the standard 18 percent sales tax rate under the Sales Tax Act of 1990, along with FED under the 2005 Federal Excise Act. However, authorities say actual tax collection from the sector remains far below its true potential.

Private estimates suggest that the tobacco industry could generate around Rs600 billion in annual taxes if all production were properly documented. The FBR hopes that the new surveillance system will help close this gap and bring the sector in line with its real capacity.

Field formations have been instructed to ensure that all manufacturers comply immediately. The measure shows the government’s growing focus on using technology to detect revenue leakages and strengthen enforcement in high-risk sectors like tobacco.