The Federal Board of Revenue’s flagship Point of Sale system is facing a severe compliance breakdown, with fresh official data revealing that nearly 80 percent of registered Tier-1 retail branches are currently marked as disconnected from the real-time monitoring network. The disclosure raises serious questions about the operational viability of the Digital FBR vision launched seven years ago.
According to FBR data updated on 16 February 2026, a total of 11,141 large retailers have been integrated into the POS system. However, branch-level compliance tells a different story. Out of 16,082 registered Tier-1 branches, 12,851 are listed as disconnected, leaving only 1,541 connected. This translates into an overall compliance rate of just 9.6 percent.
The sectoral breakdown underscores the scale of non-compliance. Among general retailers, who were the primary focus of the documentation drive, only 1,212 out of 13,854 branches remain connected, reflecting a compliance rate of 8.7 percent. More than 11,200 outlets in this category are currently offline from FBR servers. In the leather and textile segment, only 118 of 1,042 branches are connected, yielding a compliance rate of 11.3 percent despite the availability of concessionary sales tax rates as incentives. Restaurants show slightly better performance, yet 896 of 1,186 outlets remain disconnected, resulting in an 82 percent disconnection rate and compliance of 17.8 percent.
Tax analysts argue that while the FBR succeeded in registering Tier-1 retailers during the inception phase, it has struggled in sustaining integration and enforcement. The POS initiative was introduced in 2019 under then finance minister Hafeez Shaikh, focusing on mandatory integration of large chains, mall-based outlets and retailers with high electricity consumption. In 2021, under finance minister Shaukat Tarin, the strategy shifted toward digitisation and consumer-led enforcement through the POS Prize Scheme, which offered monthly prizes of up to Rs1 million to shoppers verifying receipts.
Despite enforcement measures initiated in 2020, the initiative’s real-time monitoring ambition appears compromised. Central to the controversy is the Re1 per invoice service fee charged to consumers on every POS-generated receipt. Since its introduction in August 2021, approximately Rs1.55 billion has been collected. In the 13 months ending July 2024 alone, Rs647 million were collected, according to a statement made in the Senate.
Transparency concerns have intensified around the utilisation of these funds. By July 2024, around Rs309 million had been allocated to Inland Revenue Service employee welfare, covering transport, housing subsidies for grade 17 to 19 officers and land purchases. Tax experts claim that over Rs1 billion remains unspent, with interest reportedly accruing on the surplus unless surrendered.
The POS Prize Scheme, notified under Section 56 of the Sales Tax Act 1990 and Rule 150ZEL of the Sales Tax Rules, was suspended in late 2022 due to reported low impact and technical issues in the Tax Asaan App. Critics contend that the suspension removed a key consumer-driven compliance mechanism while the Re1 fee continues to be collected.
Observers further allege that some Tier-1 retailers continue charging customers sales tax without issuing FBR-integrated receipts, undermining the purpose of digital documentation. Although the FBR possesses enforcement tools including sealing premises and reducing adjustable input tax by 60 percent for non-compliant businesses, current data suggests limited effectiveness.
With more than 12,000 branches disconnected, the gap between policy ambition and operational execution has widened. As the Digital FBR initiative moves into 2026, the sustainability of a system funded by consumer fees but marked by widespread disconnection remains under scrutiny, highlighting the enforcement and governance challenges facing Pakistan’s retail documentation drive.
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