Production monitoring system: FBR sets December 20 deadline for steel manufacturers
ISLAMABAD: The Federal Board of Revenue (FBR) has set December 30, 2026, as the deadline for steel manufacturers to install, integrate, test and operationalise a production monitoring system at every manufacturing facility and on each active production line to electronically monitor production and dispatches.
Through Sales Tax General Order (STGO) No. 29 of 2026, issued on Wednesday, the FBR has directed all registered steel manufacturers, including melters, re-rollers and composite units, to implement the system in accordance with the Sales Tax Act, 1990, and relevant provisions of the Sales Tax Rules, 2006.
The order applies to manufacturers melting ferrous scrap, direct reduced iron, sponge iron and other ferrous inputs to produce billets, ingots and primary steel products, as well as units re-heating, rolling or re-rolling semi-finished steel into bars, reinforcing bars, rods, sections and other finished products. Composite units carrying out melting, casting and rolling at the same premises are also covered.
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Under the prescribed monitoring mechanism, the system will electronically track production and dispatches through four intervention stages, depending on the manufacturing configuration of each unit. These include identification and counting of billets or ingots, verification of product dimensions and sizes, counting and classification of finished products, and final weight and dispatch verification through integrated weighbridges.
The system will capture production data, including product dimensions, production-line details, date and time, and estimated weight. At the dispatch stage, it will record gross, tare and net weights, vehicle registration numbers, product categories and other relevant information, enabling the FBR to reconcile actual dispatched weight with estimated production and flag discrepancies exceeding prescribed tolerances.
The FBR has also prescribed minimum equipment and software requirements, including industrial-grade cameras, network video recorders, computing equipment for video analytics, sensors, production-line interfaces, weighbridge integration, uninterrupted power supply and tamper-detection controls. The system must provide real-time production monitoring, automated counting and classification, weight estimation, reconciliation, alerts and secure transmission of production and dispatch data to the Board’s Central Control Unit.
According to the order, steel manufacturers must procure, install and maintain the equipment through vendors authorised by the FBR under Chapter XIV-BA of the Sales Tax Rules, 2006. The order identifies M/s ISSM Labelling Solutions and M/s Obsidian as authorised vendors for the iron and steel sector.
The manufacturers will be responsible for providing access to their production and dispatch facilities, ensuring the availability of required information technology infrastructure, connectivity and power supply, and routing all production and dispatches through the approved monitoring system. They will also be required to pay the prescribed vendor fees and charges and protect the installed equipment against obstruction, disconnection, bypass, alteration or tampering.
The order further requires manufacturers to report any system failure, damage, tampering or inoperative production line within one hour to the FBR, its Central Control Unit and the concerned Commissioner Inland Revenue. They must also give 30 days’ advance notice of any changes to products, production lines, weighbridges or dispatch processes that may affect the monitoring system.
The FBR has made it clear that no steel manufacturer may remove or supply specified goods from its business premises unless production has been monitored under the prescribed rules and the dispatch, where applicable, has been recorded and reconciled through the approved system. Manual records, private camera systems or standalone weighbridge entries will not be accepted as substitutes for the Board-approved monitoring process.
The concerned Chief Commissioners Inland Revenue have been directed to identify all operational melters, re-rollers and composite steel units, coordinate site surveys, oversee installation and acceptance testing, monitor implementation progress and review unexplained production or dispatch variances. The monitoring data may also be used for lawful reconciliation with tax returns, invoices, stocks, electricity consumption and weighbridge records.
The order states that failure to install, operationalise, protect or use the prescribed equipment, removal or supply of goods without monitoring, obstruction of inspections, tampering, concealment of production lines or dispatch points, and failure to report specified incidents will be dealt with under the Sales Tax Act, 1990, and the rules made thereunder, following the applicable legal procedure, FBR added.
Copyright Business Recorder, 2026