Pakistan’s textile industry is entering a major new regulatory phase. The Federal Board of Revenue (FBR) has officially launched a strict monitoring mechanism to control the production of undocumented cotton bales—locally known as Gol Mall—by introducing a video surveillance and analytics system across all textile spinning units.

This historic move is expected to reshape the country’s cotton and textile supply chain, which has long suffered from tax evasion, undocumented production, and manipulation in raw material reporting. With millions of cotton bales slipping out of the formal system each year, Pakistan faces massive revenue loss and weakened documentation in one of its most critical export sectors.

The new system, announced through Sales Tax General Order (STGO) 8 of 2025, marks the government’s strongest intervention yet to strengthen transparency, enhance tax collection, and regulate industrial output.

Why FBR Launched Video Surveillance for Cotton Bales

For years, undocumented cotton bales have caused:

• Major tax evasion
• Distorted production statistics
• Revenue leakages running into billions
• Black-market manipulation
• Artificial shortages
• Unfair competition between compliant and non-compliant spinning mills

The FBR aims to end these gaps by ensuring real-time visibility of cotton bale consumption, mixing, and production cycles inside spinning mills.

New Legal Framework Behind the Surveillance Initiative

The notification is backed by:

• Section 40C(2) of the Sales Tax Act, 1990
• Chapter XIV-BA of the Sales Tax Rules, 2006

This gives FBR full authority to implement video monitoring and real-time analytics inside industrial units to track production volumes and raw material usage.

The video system is now a mandatory requirement for all textile spinning units registered for sales tax.

How the Video Analytics System Will Work

Under the new rules, every spinning unit must install:

1. High-Resolution Cameras

Placed at:

• Production lines
• Blendomats
• Auto-plucker machines
• Cotton mixing and feeding systems
• Entry and exit points where cotton bales are handled

2. Central Monitoring Equipment

Approved vendors will install:

• Storage servers
• Monitoring screens
• AI-based analytics tools
• Data sharing systems

FBR will receive continuous production data from each approved unit.

3. Automated Alerts

The system will generate alerts for:

• Abnormal stock movement
• Suspicious bale entries
• Production surges inconsistent with tax filings
• Changes in product mix without proper reporting

This ensures no spinning unit can hide undocumented bales or manipulate reporting.

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Deadline for Installation: December 31, 2025

FBR has clearly directed that all textile spinning units must complete the installation by 31 December 2025.

Failure to comply may result in:

• Suspension of sales tax registration
• Audits
• Penalties
• Possible sealing of units in extreme cases

This makes it one of the strictest enforcement deadlines issued by the tax authority for the textile sector.

Chief Commissioners Appointed for Coordination

To avoid delays and excuses, FBR has ordered:

• Each Regional Tax Office (RTO) and Large Taxpayer Office (LTO) to appoint focal persons
• These officers will coordinate between spinning mills and authorized vendors
• Units must report installation progress to their jurisdiction’s chief commissioner

This structured coordination aims to ensure 100% compliance before the deadline.

Why FBR Is Targeting High-Risk Spinning Units First

FBR has officially stated that high-risk units—those suspected of handling a large volume of undocumented cotton bales—will be monitored on priority.

These are mills where FBR suspects:

• Undeclared bale entries
• Underreported production
• Black market linkages
• Mismatched electricity usage vs. production reports
• Frequent discrepancies in monthly sales tax returns

A jurisdiction-wise list of these spinning mills has already been circulated across field formations.

Impact on Pakistan’s Textile Sector

The textile sector contributes:

• 60% of Pakistan’s exports
• 40% of manufacturing jobs
• A major chunk of GDP

However, undocumented trading has weakened:

• Revenue collection
• Input tracking
• Production audits
• Raw material reporting

This move aims to strengthen the entire supply chain from cotton bale arrival to yarn production.

Benefits for the Textile Industry

The surveillance system will:

• Promote fair competition
• Reduce black market trading
• Standardize production reporting
• Increase transparency in spinning operations
• Help the government plan cotton import/export policies
• Improve Pakistan’s credibility in textile export markets

Mill owners who already follow rules will no longer be unfairly undercut by tax-evading mills.

How Video Surveillance Will Increase Tax Revenue

By tracking every cotton bale used inside spinning mills, FBR will:

• Accurately calculate production
• Prevent gross under-reporting
• Detect sales without invoices
• Block misuse of input tax credit
• Identify fake suppliers and paper mills

Pakistan currently loses billions each year in taxes due to undocumented cotton trading. The new system can significantly reduce this gap.

Will Spinning Mills Resist This Move?

Some mills may oppose the system because:

• They have been benefiting from under-reporting
• Video surveillance exposes their production cycles
• Tax evasion becomes impossible with AI monitoring

However, FBR has made it clear:

Compliance is not optional.

Any resistance will trigger legal action.

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How This Move Helps Farmers and Cotton Traders

When cotton goes undocumented:

• Farmers get lower prices
• Middlemen manipulate stock
• Mills buy cotton off-the-books at suppressed rates

With official monitoring:

• Cotton demand becomes transparent
• Farmers get better prices
• Supply chain corruption reduces

This benefits the entire cotton value chain.

Pakistan’s Larger Digital Tax Strategy

The video surveillance system is part of FBR’s broader digital transformation, including:

• AI-based production monitoring
• Real-time invoice tracking
• POS integration
• Track & trace system
• Digital tax filing

Pakistan aims to automate industrial monitoring the way advanced economies do.

Challenges Ahead

The system may face:

• Delays from mills
• Technical issues during installation
• Lack of IT readiness
• Power outage complications
• Attempts to bypass cameras

FBR must ensure strict penalties to prevent manipulation.

Future Plans: AI + Real-Time Production Matching

FBR aims to link the video system with:

• Electricity consumption data
• Production output
• GST filings
• Inventory records

This will automatically detect:

• Hidden production
• Fake reporting
• Mismatched input-output patterns

Pakistan will move toward fully automated industrial monitoring.

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Conclusion About FBR video surveillance cotton bales:

FBR’s move to monitor cotton bale processing through a video surveillance and analytics system is a landmark decision. It targets one of the biggest sources of tax evasion in Pakistan’s textile sector—undocumented cotton bales or “Gol Mall.” With the December 31, 2025 installation deadline, all spinning units must integrate the system or face serious penalties. This step strengthens transparency, reduces black market manipulation, and helps Pakistan build a documented, fair, and competitive textile industry.

FAQs – FBR Video Surveillance for Cotton Bales