ISLAMABAD: The Federal Board of Revenue’s data on registered Tier-1 (big) retailers revealed that 80 percent of the Tier-1 branches are marked as ‘Disconnected’, reflecting an extremely poor level of compliance.
The FBR’s data disclosed that the FBR has integrated 11,141 big retailers into the Point of Sales (POS) system up to February 2026. However, the compliance level of connected/disconnected branches of these big retailers depicts a very dismal picture. The data of connected and disconnected branches of the registered retailers is also available on the FBR’s website.
Tax experts told Business Recorder that seven years after the vision for a “Digital FBR” was enshrined in the Finance Act 2019, the flagship Point of Sale (POS) initiative — designed to be the cornerstone of Pakistan’s retail documentation — is teetering on the brink of collapse.
READ MORE: FBR integrates 11,141 big retailers into POS system up to Feb
Fresh FBR data of POS dated 16 February 2026, which the reporter has access to, reveals a staggering failure in compliance, with nearly 90% of registered Tier-1 branches currently operating outside the real-time monitoring net, even as the tax authority sits on over a billion rupees collected from the pockets of ordinary citizens.
The initiative was launched under former Finance Minister Hafeez Shaikh in 2019. The focus during this period was primarily on defining Tier-1 retailers (large chains, stores in malls, and those with high electricity bills) and making their integration mandatory.
Upon his appointment, former Finance Minister ShaukatTarin 2021 pivoted the strategy toward “digitization and documentation.” He introduced the POS Prize Scheme (with monthly prizes of up to Rs. 1 million) to use consumer pressure as a way to reach the 500,000-retailer target.
Despite aggressive enforcement measures launched in 2020, the level of compliance across the retail sector is officially classified as “Poor.” According to the latest sectoral reports dated 16 February 2026 of FBR, out of 16,082 registered Tier-1 branches, a massive 12,851 (80%) are marked as “Disconnected.”The overall compliance level across all sectors is extremelylow, with a significant majority of registered “Tier-1” branches remaining disconnected from the real-time FBR’s POS system.
Sectoral Breakdown
The breakdown across key sectors paints a grim picture:
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Sector Total Connected Disconnected Under Compliance
Branches Implementation Rate
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Retailers 13,854 1,212 11,214 1,428 8.7%
Restaurants 1,186 211 896 79 17.8%
Leather &
Textile 1,042 118 741 183 11.3%
Combined 16,082 1,541 12,851 1,690 9.6%
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General Retailers: The primary target of the documentation drive has a dismal compliance rate of just 8.7%. Out of 13,854 branches, over 11,200 have gone dark.
Leather & Textile: Despite being offered concessionary sales tax rates as an incentive, only 11.3% of branches remain integrated.
Restaurants: While performing slightly better, the sector still sees 82% of its outlets disconnected from the FBR servers.
Analysts suggested that while the FBR was successful in the “inception” phase of registering businesses, the “achievement” phase has been met with massive resistance and technical inertia, lack of trust, leaving the “real-time” vision a mere paper ambition.
Central to the controversy is the Rs1 per invoice service fee charged to every consumer on every invoice issued under the point of sales (POS).
Since its inception in August 2021, the FBR has collected approximately Rs. 1.55 billion. In 13 months ending July 2024, Rs 647 million were collected through Re 1 POS as per the statement of the Finance Minister in reply to a question by the Senate.
However, the transparency of these funds is under fire as the actual amount of funds collected and used is opaque, and no regular data is shared
Till July 2024, approximately Rs 309 million has been funneled into “Inland Revenue Service (IRS) Employee Welfare” — funding fuel/transport and housing subsidy to grade 17 to 19 officers and purchase of land.
The POS Prize Scheme, which was notified as per section 56 of the Sales Tax Act 1990 and Rule 150ZEL of Sales Tax Rules, which once offered monthly cash prizes of up to Rs. 1 million to encourage shoppers to verify receipts, was suspended in late 2022.This also raises the constitutional issues of whether a government department can collect fees for its own consumption.
Tax experts pointed out that the FBR is reportedly holding a surplus of over Rs. 1 billion in unspent service fees, and every month, interest is also being earned on this surplus unless the same has been surrendered.
Critics argue that while the public continues to pay the “digital fee” on every purchase, the benefits in terms of tax documentation and consumer incentives have vanished.
The suspension of the prize scheme was a major blow to consumer-led enforcement. Initially halted due to “low impact” and “technical glitches” in the Tax Asaan App, the scheme has remained largely dormant.
Many Tier-1 retailers continue to collect taxes from customers without providing FBR-integrated receipts, effectively pocketing the tax money that the POS system was built to capture, a tax expert said.
The failure comes despite the FBR’s power to seal premises and reduce adjustable input tax by 60% for non-compliant retailers. The data suggest these “sticks” are not working. With over 12,000 branches currently disconnected, the FBR faces a monumental enforcement challenge that digital monitoring was supposed to simplify, not complicate.
As the “Digital FBR” vision enters 2026, the question remains: Can a system built on consumer fees and mandatory integration survive if the tax authority cannot keep the servers connected or the incentives alive? For now, the POS initiative remains a billion-rupee monument to documented potential and realized failure, tax expert added.
Copyright Business Recorder, 2026
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