ISLAMABAD: The Federal Board of Revenue (FBR) is evaluating the adoption of video analytics–based production monitoring systems as an alternative to the existing Track and Trace System (TTS) deployed across multiple manufacturing sectors.
Official sources familiar with the matter told Business Recorder that while the initiative aims to explore technological diversity, the Track and Trace System has already demonstrated measurable success in ensuring transparency, curbing tax evasion, and improving compliance across key industries.
According to sources, the track and trace System, introduced by the FBR to enhance tax collection and production visibility, enables real-time monitoring of goods through the affixation of secure, machine-readable fiscal marks on each product. These tax stamps carry cryptographic security features that allow products to be verified and traced from the point of production to retail distribution. The system ensures end-to-end visibility and helps prevent counterfeiting, under-reporting, and illicit trade.
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Contrary to this, the proposed video analytics approach relies on cameras and artificial intelligence to count products as they move along the production line. While it offers insight into production volume and operational efficiency, it does not authenticate products or extend monitoring beyond the factory premises. Industry observers note that this limitation restricts its potential for regulatory enforcement and tax validation.
Moreover, by not suitably marking the products, visible deterrence and distinction of tax paid compliant products vs. those produced by the informal sector cannot be ascertained by consumers, limiting its effectiveness along the supply chain.
Sources stated that production monitoring of known factories is a valuable addition to the FBR’s attempt to reduce friction with tax payers and digitalise interaction which was previously handled manually by inspectors and prone to inaccuracies.
On the other hand, without a visible mark or tax stamp to distinguish compliant from smuggled products, video analytics alone may not be able to replace the benefits accruing from the track & trace system where there is immediate identification of genuine products vs. smuggled or counterfeit in cigarettes for example as evidenced by the lack of a licensed, verifiable and scan-able tax stamp with currency paper like security features.
According to official data, the deployment of TTS in the sugar sector resulted in a 33 percent increase in tax revenue collection during the fiscal year 2021–22, alongside a 34 percent rise in reported production, reaching 7.51 million tons.
According to sources, after the implementation of TTS, the tax revenue collection has surged to Rs83.5 billion from tobacco sector during fiscal year 2023; whereas, FBR has collected Rs61.79 billion revenue from tobacco sector prior to implementation of T&T during fiscal year 2022, depicting a growth of 26 percent.
The improved documentation and transparency, insiders said, reflect the system’s contribution to formalising the sector and increasing revenue inflows to the national exchequer.
Despite these successes, FBR is considering the use of video analytics as part of its broader digital transformation agenda. However, analysts caution that while video analytics may serve as a supplementary tool for internal monitoring and efficiency analysis, it lacks the robust authentication, regulatory compliance, and fraud prevention features of fiscal marking–based systems, officials maintained.
FBR is expected to continue leveraging the track and trace system in sectors where it is already functional and consider expanding it to other high-potential industries to consolidate the progress achieved so far.
Integrating emerging technologies like video analytics could be explored in parallel, but without replacing the proven and compliant Track and Trace framework that has already demonstrated substantial economic and governance benefits, officials added.
Copyright Business Recorder, 2025
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