Issued on October 28, 2026, through BPRD Circular No. 03, the handbook covers commercial banks, digital banks, microfinance banks, exchange companies, electronic money institutions, payment service providers and private credit bureaus.

Key Licensing Requirements

The new framework outlines eligibility criteria, capital requirements, application fees and approval procedures. Applicants must demonstrate financial strength, transparent ownership, legitimate funding sources and compliance with regulatory standards.

Application processing fees range from Rs 200,000 to Rs 5 million, depending on the type of institution. Complete applications that meet the prescribed requirements generally receive decisions within six to eight weeks, although processing times may vary.

Locally incorporated commercial banks must maintain minimum paid-up capital of Rs 20 billion. Digital banks face separate capital requirements based on their licence category and operational stage.

The handbook also establishes governance standards and disqualifies certain individuals, including specified public office holders, from obtaining licences or acting as sponsor shareholders.

Impact on Pakistan’s Financial Sector

The consolidated framework provides clearer guidance for businesses seeking to enter Pakistan’s financial services industry. It also reinforces the SBP’s focus on financial stability, transparency, consumer protection and regulatory compliance.

For prospective investors and fintech companies, understanding the updated requirements will be essential before applying for a licence.

Source: State Bank of Pakistan, BPRD Circular No. 03, October 28, 2026.

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Pakistan’s Federal Board of Revenue has broadened its electronic production monitoring system to cover a wider range of textile fibres, requiring registered spinning mills to install surveillance cameras and integrate real-time production data with the tax authority’s monitoring network.

The Federal Board of Revenue (FBR) has introduced new monitoring requirements for registered textile spinning mills across Pakistan, directing them to install video surveillance cameras on machinery handling various types of fibers by November 15, 2026.

The move aims to strengthen oversight of textile production activities, improve transparency and enable the tax authority to monitor fibre consumption and manufacturing processes more effectively.

The latest directive was issued through Sales Tax General Order No. 30 of 2026 on October 23, 2026. It extends the existing electronic surveillance framework beyond cotton bales to include loose, opened and blended fibers used in textile manufacturing.

New Rules Cover Multiple Fiber Types

Under the revised instructions, the monitoring requirements apply to natural, synthetic and blended fibers, including cotton, polyester, viscose, wool, acrylic and recycled materials.

Previously, the FBR’s electronic production monitoring system focused on cotton bales under an earlier order introduced in 2025. The latest development expands the scope of surveillance to cover additional stages of fiber handling and preparation before spinning.

The new requirements are intended to help the FBR obtain a clearer picture of the materials entering production and improve its ability to verify reported manufacturing activity.

Surveillance Cameras Required at Key Production Stages

Registered textile spinning units must install cameras at designated locations throughout their fiber preparation and blending operations.

These locations include hopper bale openers, feeding equipment and machinery where loose or opened fibers are introduced into the production process. Cameras will also be required at weighing and blending feeders used for processing natural and man-made fibers.

Additional surveillance will cover blow room lines handling polyester, viscose and acrylic, along with waste-opening and recycling sections where leftover materials are returned to production.

Mixing and laydown areas, where fibers are arranged, combined or prepared for subsequent processing, will also fall within the monitoring framework.

By covering these production points, the FBR intends to improve visibility into the movement and processing of raw materials within textile spinning facilities.

Real-Time Data Transmission to the FBR

The new system will involve more than simply installing cameras. The equipment must work with compatible video analytics software capable of identifying and measuring fibers as they enter the manufacturing process.

Under the directive, vendors previously authorised by the FBR to supply electronic production monitoring systems must upgrade their solutions to accommodate the expanded requirements.

The software must be capable of detecting, counting and quantifying loose, opened and other non-bale fibre materials. This will allow production information to be collected digitally and transmitted to the FBR’s Central Control Unit for storage and future reference.

The system must also monitor production activity in real time, identify unexpected interruptions and generate quantitative production analyses.

These capabilities are expected to help the tax authority examine production patterns, identify potential irregularities and use relevant analytical information when considering enforcement action under applicable laws.

Compliance Deadline Set for November 15, 2026

The FBR has instructed registered spinning mills to complete the necessary arrangements for the installation of surveillance equipment by November 15, 2026.

This includes the required cameras, hardware, software and related electronic monitoring infrastructure. The directive took effect immediately upon issuance, making timely preparation important for affected businesses.

Spinning mills may need to assess their existing production lines, identify the locations requiring additional surveillance and coordinate with authorised technology vendors to ensure that their systems meet the updated specifications.

Businesses should also confirm that their monitoring arrangements can communicate with the FBR’s central system and provide the required production information without interruption.

Additional Responsibilities for Monitoring System Vendors

The updated rules also place greater responsibility on technology providers already approved by the FBR.

These vendors must ensure that their video analytics solutions are compatible with the newly installed cameras and can process data from fiber handling operations that were not fully covered under the earlier framework.

The technology must support automated object detection, counting, production measurement and the transmission of information to the designated control unit.

Reliable integration will be essential because the effectiveness of the monitoring system depends on both the quality of video capture and the accuracy of the data generated by the analytics software.

Legal Basis of the New Directive

The FBR issued the order under Section 40C(2) of the Sales Tax Act, 1990, along with relevant provisions of the Sales Tax Rules, 2006.

The new order supplements Sales Tax General Order No. 08 of 2025 rather than replacing it. Consequently, the earlier requirements relating to cotton bale monitoring remain applicable alongside the expanded surveillance obligations.

The notification was issued with the approval of the FBR’s Member Inland Revenue Operations and signed by Second Secretary Khalid Mehmood.

What This Means for Pakistan’s Textile Industry

The expansion of electronic production monitoring represents a further step towards the digital supervision of Pakistan’s textile manufacturing sector.

For spinning mills, the immediate priority will be to meet the installation deadline and ensure that the necessary technology is functioning properly. Businesses may also need to review internal production procedures, staff responsibilities and data management practices to accommodate the additional monitoring requirements.

For the FBR, the expanded system could provide more detailed information about raw material consumption and production activity, potentially improving the identification of discrepancies between recorded and actual operations.

However, implementation will depend on the practical integration of surveillance equipment with different types of machinery, the reliability of fiber counting technology and the ability of businesses and vendors to complete the required upgrades on time.

Conclusion

The FBR’s latest order significantly widens the scope of electronic production surveillance in Pakistan’s textile spinning industry by bringing loose, opened, blended and recycled fibers within the monitoring framework.

With the November 15, 2026 deadline approaching, registered spinning mills and authorised technology vendors need to prepare for the installation and integration of the required systems.

The development reflects the tax authority’s continuing efforts to strengthen production oversight through digital monitoring, automated data collection and real-time reporting while extending the existing framework to cover a broader range of textile manufacturing activities.

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Pakistan’s economic outlook is facing renewed uncertainty as the ongoing conflict in the Middle East drives up global energy and food prices, raises inflationary pressures and threatens to weaken the country’s external financial position. In its October 2026 Regional Economic Outlook, the International Monetary Fund (IMF) warned that Pakistan could face growing economic challenges over the medium term, particularly as imports increase, remittance growth slows and international borrowing becomes more expensive.

The Fund’s assessment highlights the difficult choices confronting Pakistan’s policymakers as they attempt to control inflation, manage public debt and maintain economic stability amid an increasingly uncertain global environment.

Rising Inflation Puts Pressure on Households

One of the most immediate concerns is the acceleration in consumer prices. Pakistan’s year-on-year inflation reached 11.1% in August 2026, largely driven by higher food and energy costs. Disruptions to energy supplies and international shipping routes have increased commodity prices, putting additional pressure on businesses and households.

The IMF has also revised its inflation outlook for Pakistan upward by 1.5 percentage points compared with its April projections. Inflation in oil-importing economies is expected to rise further during 2026 before gradually easing from 2027.

The increase in global energy prices has been particularly significant. International oil prices climbed sharply following the escalation of hostilities, while refined petroleum products, including diesel, gasoline and jet fuel, recorded even steeper increases. Higher natural gas and wheat prices have added to the pressure.

For Pakistan, which depends heavily on imported energy, these developments can translate into higher transportation costs, more expensive electricity and production expenses, and rising prices for essential goods. The resulting increase in living costs could also weaken household purchasing power.

External Sector Faces New Challenges

The IMF expects Pakistan’s external position to weaken over the medium term as imports rise and remittance inflows moderate. This presents a potential challenge for the country’s foreign exchange reserves and its ability to meet external financing requirements.

Remittances have provided an important source of foreign exchange for Pakistan, helping support household consumption and the country’s external accounts. Although inflows remained broadly stable during the first half of 2026 despite regional disruptions, a slowdown in the coming years could reduce this support.

At the same time, higher international oil and commodity prices could increase Pakistan’s import bill. If import payments grow faster than export earnings and remittance receipts, pressure on the balance of payments could intensify.

The IMF’s warning does not mean that an immediate external crisis is inevitable. However, it underlines the importance of maintaining adequate foreign exchange reserves, strengthening export performance and reducing excessive dependence on imported energy.

Higher Borrowing Costs Could Complicate Debt Management

Pakistan’s substantial financing requirements remain another major source of concern. The IMF has identified the country as particularly vulnerable to tighter global financial conditions because of its large gross financing needs and concerns surrounding government debt.

If the Middle East conflict continues to push energy prices higher, major central banks may keep interest rates elevated for longer than previously anticipated. This could increase international borrowing costs for countries with significant financing needs and limited fiscal flexibility.

For Pakistan, more expensive borrowing would make it harder to finance government expenditures, refinance existing debt and manage repayment obligations. Higher interest payments could also consume a larger share of public revenue, leaving less room for development projects, healthcare, education and social protection.

The situation could become more difficult if investor confidence weakens. A deterioration in market sentiment may lead to higher sovereign risk premiums, capital outflows and tighter domestic financial conditions.

These risks make prudent debt management, stronger revenue collection and credible economic policies particularly important.

Interest Rate Policy Faces a Difficult Balancing Act

The IMF has stressed that Pakistan’s monetary authorities should remain prepared to tighten policy further if inflationary pressures intensify.

Pakistan was the only economy among the examined MENAP countries with flexible exchange rates that increased interest rates after the conflict began in February 2026. Nevertheless, the Fund considers the country vulnerable to renewed inflation, particularly because its inflation rate remains elevated and forward-looking real interest rates are below estimated neutral levels.

Higher interest rates can help restrain demand and prevent inflation expectations from becoming entrenched. However, tighter monetary policy also makes borrowing more expensive for businesses and consumers, potentially slowing investment and economic activity.

Policymakers therefore face a delicate challenge: controlling inflation without placing unnecessary pressure on economic growth.

The IMF recommends keeping monetary policy focused on price stability while maintaining a cautious fiscal stance. It also advises governments to avoid broad spending programmes that could increase borrowing requirements and undermine the effectiveness of monetary tightening.

Any assistance provided to households affected by rising food and fuel prices should instead be temporary, carefully targeted and designed to avoid adding significantly to the budget deficit.

Rupee Stability and Foreign Exchange Reserves Remain Important

Exchange-rate movements could play a significant role in determining how international price shocks affect Pakistan’s economy.

The IMF supports exchange-rate flexibility in countries such as Pakistan, arguing that it can help economies adjust to external pressures and preserve foreign exchange reserves. However, a weaker rupee can make imported fuel, machinery, raw materials and food more expensive, potentially adding to domestic inflation.

The Fund recommends that foreign exchange intervention be reserved for disorderly market conditions rather than used to prevent every exchange-rate adjustment.

For Pakistan, the priority will be to maintain orderly currency-market conditions while ensuring that reserves remain sufficient to meet external obligations. Stronger exports, stable remittance inflows and improved investor confidence would help reduce pressure on the external account.

Banking Sector Risks Require Careful Monitoring

The IMF has also highlighted the connection between government finances and the banking sector. Pakistani banks hold substantial amounts of government securities, creating a potential channel through which fiscal difficulties could affect financial stability.

If government borrowing costs rise sharply or financial markets experience an abrupt repricing of assets, banks could face additional risks. These pressures might reduce their willingness or capacity to extend credit to private businesses.

A decline in private-sector lending could then weaken investment, production and employment, creating further difficulties for economic growth.

The Fund has urged financial supervisors to monitor liquidity, funding conditions and asset quality, particularly in industries vulnerable to regional disruptions, including transport, tourism and trade-related businesses.

Maintaining a sound banking system will be essential to ensuring that financial-sector pressures do not amplify the wider economic impact of the conflict.

Economic Growth Remains Resilient, but Risks Persist

Despite these challenges, Pakistan’s economic activity remained broadly resilient during the first half of 2026, according to the IMF. Growth projections for the country were largely unchanged from the Fund’s April assessment.

The report noted that remittances, tourism-related activity, supportive financial conditions and policy measures had helped several oil-importing economies withstand the initial impact of the conflict. Pakistan was also among the countries where hotel occupancy rates remained stable or improved compared with the same period in 2025.

However, resilience in economic activity does not eliminate the risks posed by higher inflation, expensive financing and external-sector pressures.

The IMF expects fiscal policy in Pakistan to remain restrictive during 2026 because the government has limited room for additional spending. This means policymakers may struggle to provide extensive relief to households and businesses without worsening public finances.

The challenge will be to protect vulnerable groups while continuing to improve the country’s fiscal position.

Regional Conflict Could Make the Outlook Worse

The IMF’s assessment is based on the assumption that security conditions and trade flows will gradually return towards normal. A prolonged conflict, however, could produce a more damaging outcome.

Further disruptions to oil and gas production, particularly in the Gulf, and continued instability around major shipping routes could push energy prices higher and increase transportation costs worldwide.

In an adverse scenario examined by the Fund, average real GDP among MENAP and Caucasus and Central Asia oil-importing economies would be around 0.5% below the baseline projection in 2027, while consumer inflation would be approximately one percentage point higher.

These estimates apply to the oil-importing economies as a group, not to Pakistan alone. Nevertheless, they illustrate the potential economic consequences of a more prolonged disruption.

For Pakistan, the effects could include a larger import bill, slower economic growth, renewed inflationary pressure and additional strain on public finances.

What Pakistan Needs to Do

The IMF’s findings underline the need for policies that strengthen Pakistan’s ability to withstand external shocks rather than relying solely on short-term measures.

Several priorities stand out:

• Strengthen export competitiveness: Expand export markets, improve productivity and reduce structural barriers that limit foreign exchange earnings.
• Improve energy security: Encourage energy efficiency, diversify energy supplies and reduce excessive dependence on imported fuels.
• Maintain fiscal discipline: Broaden the tax base, improve revenue administration and make public expenditure more efficient.
• Protect vulnerable households: Direct financial assistance towards those most affected by rising food and energy costs instead of relying on costly, untargeted subsidies.
• Preserve monetary credibility: Respond decisively to persistent inflation while communicating policy decisions clearly to markets and the public.
• Strengthen financial oversight: Monitor banks’ exposure to government debt and ensure that emerging liquidity or credit risks are addressed promptly.

These measures would not remove the immediate effects of the Middle East conflict, but they could help reduce Pakistan’s vulnerability to future external shocks.

Conclusion

The IMF’s October 2026 outlook presents a mixed picture for Pakistan. Economic activity has demonstrated resilience, but rising inflation, potentially slower remittance growth, increasing import requirements and expensive borrowing could place renewed pressure on the country’s economy.

The central challenge is to maintain price stability and external financial resilience without undermining growth or placing an excessive burden on households.

Much will depend on the duration of the Middle East conflict, movements in international commodity prices and the strength of Pakistan’s domestic policy response. A prolonged crisis would make the adjustment more difficult, particularly given the country’s substantial financing requirements and limited fiscal space.

Ultimately, Pakistan’s ability to navigate this period will depend not only on short-term monetary and fiscal decisions but also on longer-term reforms that strengthen exports, improve public finances, enhance energy security and support sustainable economic growth.

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Pakistan’s Federal Board of Revenue (FBR) has introduced a new electronic auction system for selling seized and confiscated goods, aiming to establish a more transparent and structured process for disposing of such items. Under the revised framework, bidders must pay a minimum one-time registration fee of Rs25,000, while online bidding will remain open for 72 hours.

The changes have been introduced through SRO 1889(I)/2026, issued on October 22, 2026, amending the Sales Tax Rules, 2006. The notification outlines procedures for registering bidders, determining the value of goods, conducting online auctions, collecting payments and releasing sold items.

Who Can Participate in the Online Auctions?

Under the new rules, individuals possessing a valid Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) can apply for registration through the FBR’s electronic auction platform.

Applicants must pay a one-time registration fee of at least Rs25,000. Once approved, each participant will receive a unique identification number, with registration confirmation sent through their registered email address or mobile phone number.

The authorized officer may verify the information submitted by applicants and reject an application if valid reasons exist. Any rejection must be supported by written grounds, including non-compliance with applicable procurement requirements.

Which Goods Will Be Sold Through the System?

The electronic auction mechanism will cover confiscated goods and seized items that have been cleared for disposal through an adjudication order.

Officials responsible for holding these goods must upload detailed inventories, photographs and relevant documentation to the online platform. They are also required to ensure the safe custody of the items and arrange inspections for interested bidders.

Before an auction is announced, the authorized officer must confirm that the goods can legally be sold. This includes checking for court-imposed restrictions, pending stay orders, applicable release or redemption options and other legal requirements.

Goods covered by an active judicial stay cannot be auctioned until the relevant restriction is lifted or otherwise ceases to apply.

How Will Reserve Prices Be Determined?

The FBR has established a valuation mechanism to determine the minimum prices at which auction lots can generally be sold.

A valuation committee comprising an additional commissioner, deputy commissioner and assistant commissioner of Inland Revenue will recommend the reserve price for each lot. Technical or valuation experts may also be consulted when necessary.

The committee may consider several factors when assessing the value of goods, including their age, physical condition and remaining shelf life. Depending on the nature of the items, the assessment may rely on sales tax invoice prices from the previous three tax periods, printed retail prices, customs-assessed values or prevailing market quotations.

If goods fail to sell in three consecutive auctions, the committee may reduce the reference reserve price by up to 10% at a time.

Online Bidding to Remain Open for 72 Hours

Auction notices will be published on the electronic platform, providing information about the available goods, reserve prices, inspection procedures, applicable taxes and duties, and the conditions governing delivery.

The online bidding period will run for 72 hours from the receipt of the first bid. During this period, the platform will display the highest valid offer and maintain records of bids, including their timestamps and bidder identification details.

After bidding closes, the authorized officer will process the highest offers and decide whether to accept or reject them. The rules require the highest qualifying offer to be accepted within 72 hours after the bidding period ends, subject to the applicable conditions.

Lower Offers May Be Accepted in Certain Cases

Generally, successful bids must meet or exceed the reserve price established for the relevant goods.

However, the rules provide an exception under which the Commissioner Inland Revenue may approve an offer below the reserve price, provided it is at least 80% of that price. Such approval may be considered after taking into account factors such as the physical condition and remaining shelf life of the goods.

This provision offers some flexibility in cases where the condition or marketability of auctioned items may affect their value.

Successful Bidders Must Pay Within Seven Days

Participants whose bids are accepted must pay the entire accepted amount within seven days of receiving the electronic acceptance notification.

The payment must also cover all applicable taxes, duties, fees and other charges associated with the purchase. Payments will be made through electronically generated challans and designated payment channels.

The FBR has made full payment verification a condition for releasing auctioned goods. Once the amount has been received and verified, an electronic release order will be issued to the custodian, allowing the goods to be handed over to the successful bidder.

Penalties for Failure to Complete Payment

Bidders who fail to pay within the prescribed deadline may face several consequences. Authorities can cancel the sale, confiscate bid security where applicable, offer the goods to the next highest valid bidder or arrange a fresh auction.

The rules also allow defaulting participants to be suspended from future auctions for up to six months after being given an opportunity to present their case. Other suspension periods may apply where specified under the relevant procurement rules.

These provisions are intended to discourage unsuccessful payment commitments and help ensure that auction proceedings are completed efficiently.

FBR Retains Powers to Cancel Auctions and Recover Goods

The revised framework gives the Commissioner Inland Revenue authority to cancel, suspend or recall auction proceedings and disqualify bidders in appropriate circumstances.

Where fraud, misrepresentation or a loss of government revenue is established, authorities may also recover goods even after they have been delivered to a purchaser.

Certain prohibited items, including arms and ammunition, narcotics and counterfeit goods, will generally remain outside the auction process unless the FBR issues specific directions permitting their disposal.

How Will Auction Revenue Be Distributed?

The rules also establish an order for distributing the proceeds generated through the sale of seized and confiscated goods.

First, the proceeds will be used to meet lawful expenses incurred in conducting the sale. Applicable taxes, duties, penalties, surcharges and other government dues will then be settled.

Any remaining amount payable to the original owner will be handled in accordance with section 40F of the Sales Tax Act, 1990.

What the New Rules Mean for Prospective Buyers

The electronic auction system introduces a formal online process for individuals interested in purchasing goods seized or confiscated by the authorities. Participants will have access to auction information through the electronic platform and will be able to submit bids without relying exclusively on conventional auction procedures.

However, prospective buyers should carefully review the terms of each auction, inspect goods where possible, consider the applicable taxes and charges, and ensure that funds are available before bidding. The seven-day payment deadline leaves limited time for arranging the full purchase amount after a bid is accepted.

Overall, the new framework establishes detailed procedures for registering bidders, valuing goods, conducting auctions and completing sales. Its practical impact will depend on how effectively the FBR implements the system and ensures compliance with the prescribed rules.

This article is based on the provisions described in SRO 1889(I)/2026. Readers should consult the official notification for the complete legal text and applicable conditions.

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In its October 2026 Regional Economic Outlook, the IMF reported that Pakistan’s inflation reached 11.1% in August, driven by rising food and energy prices. The Fund also expects imports to increase and remittance growth to moderate, potentially putting additional pressure on the country’s foreign exchange position.

The IMF cautioned that prolonged regional tensions could make oil imports more expensive and force Pakistan to consider further interest rate increases. Higher borrowing costs could also increase the government’s debt burden and limit spending on development.

Despite these challenges, Pakistan’s economic activity remained broadly resilient during the first half of 2026. However, limited fiscal space leaves the government with fewer options to provide widespread financial relief.

The IMF recommends prudent monetary and fiscal policies, improved tax collection and targeted assistance for vulnerable households.

Conclusion Pakistan’s economic outlook remains uncertain as geopolitical tensions threaten price stability and external financing. Strong economic management and structural reforms will be essential to control inflation and strengthen the country’s financial resilience.

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Pakistan’s Federal Board of Revenue (FBR) has introduced a new compliance requirement for the steel industry, directing registered manufacturers to install digital production monitoring systems by December 30, 2026. The initiative aims to strengthen oversight of steel production, improve transparency in product movement and reduce the risk of tax evasion.

The directive, issued under Sales Tax General Order (STGO) No. 29 of 2026, applies to steel manufacturers operating under the Sales Tax Act, 1990, and the Sales Tax Rules, 2006.

Which Steel Businesses Must Comply?

The new requirement covers three major categories of steel manufacturers:

• Steel melters: Businesses producing billets, ingots and other primary steel materials.
• Steel re-rollers: Units processing semi-finished steel into products such as bars, rods and reinforcing steel.
• Composite manufacturing units: Facilities carrying out multiple stages of steel production.

All registered manufacturers falling within the order’s scope must ensure that their production facilities and active manufacturing lines are equipped with the prescribed monitoring technology before the deadline.

How Will the New Monitoring System Work?

Under the FBR’s instructions, manufacturers will be required to use electronic systems that track production and record the movement of finished goods.

The technology will identify products, count output, verify dimensions and measure weight. Dispatches will also be documented through integrated weighbridges, capturing information such as vehicle registration numbers, estimated shipment weights and other relevant dispatch details.

By collecting this information electronically, the FBR will be able to compare reported production with actual shipments and investigate differences that could indicate unreported output or irregularities.

The system is intended to provide tax authorities with a clearer picture of manufacturing activity and the movement of steel products throughout the supply chain.

Installation Through FBR-Approved Vendors

Steel manufacturers must obtain and install the required equipment through vendors authorized by the FBR. The order identifies ISSM Labelling Solutions and Obsidian among the approved providers.

Businesses will also be responsible for keeping the systems operational and ensuring that the collected information is transmitted securely and continuously to the FBR’s Central Control Unit.

Simply installing the equipment will not be sufficient. Manufacturers must maintain its proper functioning and comply with the reporting and data-transmission requirements specified in the order.

Strict Rules for Equipment Failures and Operational Changes

The new framework introduces specific reporting obligations for manufacturers.

Any system breakdown, equipment damage or suspected tampering must be reported to the relevant authorities within one hour. Businesses must also provide 30 days’ advance notice of changes that could affect their production lines or dispatch arrangements.

These provisions are intended to help the FBR maintain uninterrupted monitoring and identify potential gaps in production records.

Steel Dispatches Without Digital Records Prohibited

One of the most significant provisions of the order concerns the movement of steel products. Manufacturers covered by the directive will not be permitted to remove or supply specified goods unless their production and dispatches have been recorded through the approved monitoring system.

Traditional documentation alone will not meet the new requirements. The FBR has clarified that manual registers, privately installed cameras and independent weighbridge records cannot replace the prescribed electronic monitoring arrangements.

This makes digital traceability a central part of the compliance process for affected steel businesses.

FBR to Monitor Implementation Across the Industry

The FBR has instructed Chief Commissioners Inland Revenue to identify operational steel manufacturing facilities, supervise the installation process and ensure that businesses follow the new rules.

Manufacturers that fail to install or operate the required equipment, remove goods without proper electronic records, conceal production facilities or interfere with monitoring devices may face legal action under the applicable sales tax legislation and rules.

The potential consequences make timely preparation essential for businesses that fall within the scope of the order.

What Should Steel Manufacturers Do Before the Deadline?

With December 30, 2026, set as the compliance deadline, affected businesses should begin reviewing their existing production and dispatch procedures.

Manufacturers should confirm whether their facilities fall under the order, contact an authorized vendor, assess the equipment required for each active production line and make arrangements for installation and testing. They should also establish internal procedures for reporting technical failures, notifying authorities about operational changes and maintaining reliable electronic records.

Early preparation can help businesses avoid last-minute installation difficulties and reduce the risk of disruption to their operations.

Conclusion

The FBR’s new production monitoring requirement represents a significant compliance development for Pakistan’s steel industry. By requiring electronic tracking of manufacturing output and dispatches, the tax authority aims to improve reporting accuracy, strengthen enforcement and discourage the movement of unrecorded goods.

For registered steel melters, re-rollers and composite manufacturers covered by the order, December 30, 2026, is the key deadline. Businesses should take the necessary steps to install and operate the approved systems, understand their reporting obligations and ensure that steel production and dispatches are properly recorded.

Compliance will be important not only for meeting the FBR’s requirements but also for maintaining smooth business operations under the updated regulatory framework.

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OpenAI is expanding its advertising operations to Pakistan and 25 additional countries, marking another major step in the company’s efforts to grow its business and diversify its revenue sources. With this latest expansion, ChatGPT advertising is now available across 89 markets worldwide.

The move reflects OpenAI’s growing focus on advertising as a source of income as the company continues to expand its artificial intelligence services and prepares for the possibility of a future initial public offering (IPO).

ChatGPT Ads Arrive in Pakistan

Pakistan is among the newly added markets where advertisers can reach ChatGPT users through the platform’s advertising services. The expansion also includes countries across Latin America, Europe, the Middle East, Africa and Asia.

Several countries joining the rollout include Bangladesh, Cambodia, Nigeria, South Africa, Serbia and Ukraine. In Latin America, new markets include Argentina, Chile, Colombia and Peru, following earlier advertising launches in Mexico and Brazil.

The expansion provides businesses in these countries with another digital channel to promote their products and services to potential customers.

Which ChatGPT Users Will See Ads?

OpenAI has clarified that advertising will be limited to ChatGPT’s Free and Go subscription tiers. Users subscribed to Plus, Pro and Enterprise plans will continue to enjoy an advertising-free experience.

This approach allows OpenAI to introduce an additional revenue stream while maintaining its existing premium subscription offering for customers who prefer not to see advertisements.

For users in Pakistan, the introduction of ads represents a potential change to the experience available on eligible plans. The precise advertising experience may depend on how the company implements its rollout in each market.

OpenAI’s Advertising Business Continues to Grow

The international expansion follows significant growth in OpenAI’s advertising operations. According to the reported figures, the company’s advertising business reached an annualised revenue run rate of $1 billion in August.

OpenAI also reported that more than 100,000 advertisers had run campaigns on ChatGPT since the company began testing advertisements on its Free and Go plans in the United States earlier in the year.

These developments suggest that the company sees advertising as an increasingly important part of its long-term business strategy.

How Can Businesses Advertise on ChatGPT?

Businesses in newly supported markets can access ChatGPT advertising through technology partners or OpenAI’s self-service Ads Manager platform.

The availability of these options could make it easier for advertisers to explore campaigns on the platform, depending on local access and eligibility requirements.

For companies seeking new ways to connect with online audiences, ChatGPT advertising could become another option alongside established digital advertising channels.

Advertising and OpenAI’s Potential IPO

OpenAI’s expansion into more advertising markets comes as the company looks for ways to strengthen its financial position ahead of a potential IPO.

Developing advertising services alongside subscriptions and other commercial offerings could help the company diversify its revenue sources. However, the expansion alone does not confirm that an IPO will take place or establish a timeline for such a move.

OpenAI has also been exploring additional advertising-related capabilities, including AI-powered advertising tools and business-sponsored agents, as part of its broader efforts to develop its commercial platform.

What This Expansion Means for Pakistan

The arrival of ChatGPT advertising creates new opportunities for businesses interested in reaching audiences through AI-powered platforms. It also introduces the possibility that users of the free service will encounter sponsored content while interacting with ChatGPT.

At the same time, users who prefer an ad-free experience can continue to use eligible paid subscription plans, including Plus and Pro.

As the rollout develops, advertisers and users in Pakistan will be watching to see how the new system works, what advertising options become available locally and how the company balances commercial growth with the quality of the ChatGPT experience.

Conclusion

OpenAI’s decision to extend ChatGPT advertising to Pakistan and 25 other countries marks a significant expansion of its advertising business. With 89 markets now included, the company is positioning ChatGPT as not only an AI assistant but also a platform for digital advertising.

The development could create new opportunities for advertisers while changing how some free-tier users experience the service. Its longer-term impact will depend on advertiser adoption, user response and OpenAI’s ability to balance revenue growth with user trust.

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During a high-level consultation chaired by Federal Commerce Minister Jam Kamal Khan at the Ministry of Commerce, exporters called for stronger bilateral trade arrangements to help Pakistani products compete more effectively in global markets. The meeting brought together representatives from different industries, senior government officials and policymakers to discuss the challenges facing the country’s export-oriented businesses.

Trade Agreements Seen as Key to Export Growth

Exporters stressed that India and Bangladesh benefit from preferential trade arrangements in several markets, giving their products a competitive advantage. They urged the government to identify these markets and explore opportunities for negotiating improved trade terms for Pakistani goods.

Better market access could help Pakistani businesses attract international buyers, expand their customer base and strengthen the country’s position in global supply chains. Industry representatives also emphasized the importance of diversifying export destinations and reducing dependence on a limited number of markets.

High Energy Costs Put Pressure on Industries

One of the major concerns raised by exporters was the increasing cost of energy and industrial production. Rising electricity and gas prices, along with the levy on gas supplied to captive power plants and provincial infrastructure charges, are putting additional pressure on manufacturers.

Higher operating expenses make it difficult for Pakistani companies to offer competitive prices in international markets. Exporters therefore called for measures to reduce the cost of doing business and create a more supportive environment for industrial growth.

The government acknowledged these concerns, with the commerce minister recognizing that energy prices, freight charges, taxation and changing international trade conditions were affecting export performance.

Delayed Tax Refunds and Banking Restrictions Remain Challenges

Exporters also highlighted delays in tax refunds, which can restrict cash flow and make it harder for businesses to finance production and fulfil new orders.

Officials from the Federal Board of Revenue discussed initiatives aimed at improving refund processing and expanding digital invoicing. However, business representatives emphasized the need for practical improvements that allow companies to receive their outstanding refunds without unnecessary delays.

Banking regulations and international payment settlement requirements were other important issues discussed during the consultation. Exporters called for greater flexibility in payment timelines, particularly when shipping delays and disruptions in global logistics affect their ability to complete transactions.

Improving these processes could help businesses manage working capital more effectively and maintain stronger relationships with overseas customers.

Shipping Disruptions and Port Efficiency Under Scrutiny

International shipping delays and rising transportation expenses are creating additional difficulties for Pakistani exporters. Delays in the movement of goods can increase costs, disrupt delivery schedules and weaken the confidence of international buyers.

Industry representatives called for better port facilitation and more effective coordination among the relevant authorities. They also stressed that export growth requires reliable logistics infrastructure and regulations that can accommodate disruptions in international trade.

EXIM Bank Financing Offers Encouragement

Exporters welcomed the financing initiative introduced by the Export-Import Bank of Pakistan, describing it as a positive step towards improving access to financial resources.

Affordable and accessible export financing can help businesses purchase raw materials, invest in equipment, increase production and enter new markets. For smaller exporters in particular, suitable financing arrangements can play an important role in supporting expansion.

Nevertheless, industry representatives stressed that financing support must be accompanied by improvements in energy costs, taxation, logistics and market access to deliver stronger results.

Livestock and Meat Exporters Face Market Access Barriers

The livestock and meat industry also raised concerns about difficulties in accessing Gulf markets. Foot-and-mouth disease, international sanitary requirements and border restrictions continue to create obstacles for businesses seeking to increase exports.

Commerce Minister Jam Kamal Khan highlighted the government’s interest in developing the livestock sector through disease control, better breeding practices, investment and the promotion of value-added products.

Plans for a dedicated board led by the private sector were also discussed as part of efforts to support livestock development and improve the sector’s export potential.

Addressing animal health requirements and strengthening compliance with international standards will be essential if Pakistan wants to expand its meat and livestock exports.

Mineral and Surgical Instruments Sectors Seek Modernization

Representatives from the mineral sector highlighted restrictions affecting mining explosives and concerns over withholding taxes. These issues, they argued, can affect production activities and increase the financial burden on businesses.

Meanwhile, representatives of the surgical instruments industry called for greater investment in technology, workforce training and industrial modernization.

Pakistan’s surgical instruments sector has opportunities to strengthen its international position, but maintaining competitiveness requires continuous improvements in product quality, manufacturing processes and compliance with global standards.

Investment in advanced machinery and skilled workers could help local manufacturers move towards higher-value products and meet the changing requirements of international customers.

Government to Prepare Recommendations for the Prime Minister

During the meeting, the commerce minister stressed the need to move beyond general discussions and develop specific, workable solutions for exporters.

Minister of State for Finance and Revenue Bilal Azhar Kayani also encouraged government departments to document industry concerns and provide clear responses. The objective is to turn the issues raised by businesses into actionable recommendations for consideration by Prime Minister Shehbaz Sharif.

The Ministry of Commerce is expected to consolidate sector-specific and broader business concerns before presenting its recommendations. Further consultations were scheduled for October 21 to review unresolved issues and finalize proposals.

What Pakistan Needs to Strengthen Its Export Competitiveness

Pakistan’s ability to compete with India and Bangladesh will depend on more than negotiating better trade agreements. Although improved market access is important, exporters also need a business environment that supports efficient production, timely payments and consistent product quality.

Several measures could help achieve this goal:

• Negotiate better market access: Identify markets where competitors receive preferential treatment and explore mutually beneficial trade arrangements.
• Reduce production costs: Review energy tariffs and other industrial charges that increase the cost of locally manufactured goods.
• Speed up tax refunds: Improve administrative processes so exporters can access their funds more efficiently.
• Improve trade finance: Expand access to suitable financing and streamline banking procedures for international transactions.
• Strengthen logistics: Improve port operations, shipping coordination and payment flexibility during supply chain disruptions.
• Invest in technology and skills: Encourage modern manufacturing, workforce development and higher-value production.
• Meet international standards: Strengthen quality assurance, animal disease control and regulatory compliance to improve access to demanding export markets.
• Expand export destinations: Develop new markets and reduce reliance on a narrow range of products and buyers.

Conclusion

Pakistan’s exporters are calling for a coordinated strategy to address the structural problems that limit their ability to compete internationally. Better trade agreements with key markets could create new opportunities, but their benefits will remain limited unless businesses can also operate with manageable production costs, reliable logistics and efficient financial systems.

The government’s upcoming policy recommendations will be an important opportunity to translate industry concerns into concrete reforms. If trade negotiations are combined with improvements in taxation, energy pricing, financing, technology and regulatory procedures, Pakistan could strengthen its export base and create better opportunities for sustainable industrial growth.

Ultimately, improving export competitiveness requires consistent cooperation between the government and the private sector, with a shared focus on productivity, innovation, market diversification and long-term economic development.

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Pakistan’s federal government is considering major changes to the country’s tax administration, including the possibility of establishing a new tax collection agency or further restructuring the Federal Board of Revenue (FBR). The move comes amid concerns over revenue performance and the limited results of previous reform efforts.

Prime Minister Shehbaz Sharif has directed the FBR to prepare a comprehensive reform plan by October 19, covering human resources, institutional restructuring, and administrative improvements. The proposals are expected to help the government determine how Pakistan’s tax collection system can become more effective.

Government Explores Options for Tax Administration Reform

The idea of creating a separate national tax collection agency was discussed during a high-level government meeting held last Saturday. Following the meeting, FBR Chairman Rashid Langrial instructed officials to prepare recommendations for consideration by the prime minister.

However, the government has not yet made a final decision. Discussions are still at an early stage, and officials are examining different approaches to improving the existing system before determining the next course of action.

According to reports published by The Express Tribune, the FBR is working on proposals in line with the prime minister’s instructions. The board has indicated that the current emphasis remains on strengthening existing operations through staffing changes, improved technology, and more efficient administrative procedures.

The FBR has also dismissed speculation that tax collection responsibilities could be handed over to a private company.

What Could a New Tax Agency Mean for the FBR?

One proposal under consideration involves establishing a separate tax collection organisation while allowing the FBR to continue operating alongside it. Under this arrangement, employees who do not move to the new institution could remain in their existing positions until retirement.

Such a change would require significant legal and administrative adjustments. Establishing a new agency with powers currently held by the FBR could involve amendments to the Federal Board of Revenue Act, 2007, as well as changes to other relevant tax laws.

The final structure will depend on the government’s assessment of the available options and the recommendations submitted by the FBR.

Previous Reform Efforts Have Yet to Resolve Key Challenges

Pakistan has attempted to modernize its tax administration several times over the past two decades. These initiatives have included transforming the Central Board of Revenue into the FBR, reorganizing employee service structures, and introducing changes to the institution’s operational framework.

In 2024, the government also launched a transformation programme worth more than Rs55 billion to improve the tax system. An earlier proposal under the caretaker government sought to separate Customs operations from Inland Revenue functions.

Despite these efforts, concerns about revenue collection and the country’s narrow tax base remain central to the government’s economic agenda. The latest discussions reflect another attempt to address longstanding structural challenges within the tax administration.

Pakistan Faces Pressure to Increase Tax Revenue

The proposed reforms come at a time when Pakistan is under pressure to strengthen public finances and improve domestic revenue generation.

The country’s tax-to-GDP ratio stood at 10.3% in the previous fiscal year, while the FBR collected more than Rs1.1 trillion less than its original annual target. These figures highlight the gap between the government’s revenue ambitions and actual collection performance.

For the current fiscal year, the government has set an ambitious tax collection target of Rs15.263 trillion. Achieving this goal would require revenue growth of more than 17%, placing additional pressure on the tax administration to improve compliance and collection efficiency.

Expanding the number of taxpayers, reducing tax evasion, improving documentation of economic activity, and making tax procedures more transparent are among the broader issues facing Pakistan’s revenue system.

Technology and Administrative Changes Could Play a Key Role

Whether the government establishes a new agency or restructures the FBR, the effectiveness of the reforms will depend on their implementation.

Better digital systems could help identify undeclared economic activity, improve monitoring, and reduce opportunities for errors or manipulation. Clearer accountability mechanisms and more efficient internal processes could also support better performance.

At the same time, institutional restructuring alone may not be sufficient to address the country’s revenue challenges. Sustainable improvements will also depend on broader tax policy, compliance, public confidence, and the government’s ability to bring more economic activity into the documented tax system.

October 19 Deadline Could Shape the Next Phase

Prime Minister Shehbaz Sharif is expected to review the FBR’s reform proposals on October 19. The review could help clarify whether the government intends to retain the existing institutional structure with significant changes or move towards creating a separate tax collection agency.

For now, the proposal remains under consideration, and no final policy decision has been announced.

The outcome could have important implications for Pakistan’s tax administration, government revenue, and the way individuals and businesses interact with the tax system. The key question is whether the proposed changes will deliver lasting improvements in tax collection, institutional accountability, and compliance.

Ultimately, the success of the reform process will be measured not simply by the creation of a new organization or changes to the FBR’s structure, but by its ability to produce more consistent revenue growth and a more transparent, efficient tax system.

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Pakistan’s agricultural sector could see significant changes under a new proposal by the Securities and Exchange Commission of Pakistan (SECP) to establish a national agricultural spot market. The proposed initiative aims to create a more organized system for buying and selling agricultural commodities while helping farmers secure better prices, reduce crop wastage and obtain financing through formal channels.

The planned digital marketplace would bring farmers, commodity buyers, warehouse operators and banks onto a common platform. By introducing transparent trading procedures and modern storage arrangements, the initiative seeks to address some of the longstanding problems affecting Pakistan’s agricultural supply chain.

SECP Introduces a New Vision for Agricultural Markets

SECP Chairman Dr Kabir Ahmed Sidhu presented the proposal at the Pakistan Institute of Development Economics’ international conference, “Mission 100 Billion Dollars.”

The proposed system would rely on digital trading, standardized commodity grading and electronic warehouse receipts to improve the efficiency of agricultural transactions. Rather than depending entirely on traditional market arrangements, farmers could access a more transparent mechanism for finding buyers and negotiating prices.

Under the suggested framework, provincial authorities would continue regulating agricultural markets, while the SECP would help develop the technological systems needed to support the initiative.

The proposal reflects an effort to modernize agricultural commerce and establish stronger links between farming, financial services and commodity markets.

Reducing Agricultural Waste Could Deliver Major Economic Benefits

Crop losses after harvesting remain a significant challenge for Pakistan. Inadequate storage, inefficient transportation and limited access to suitable facilities can force farmers to sell produce quickly or allow crops to deteriorate before reaching consumers.

According to figures presented by the SECP chairman, post-harvest losses are estimated at between 20 and 40 per cent. With crop production valued at approximately Rs8.8 trillion, these losses represent a substantial economic burden.

Agriculture accounts for around 23.44 per cent of Pakistan’s gross domestic product, making improvements in this sector important for rural livelihoods and overall economic performance.

Sidhu estimated that reducing crop losses by just one percentage point could preserve approximately Rs88 billion in economic value.

Expanding storage facilities and improving supply chain management could therefore help farmers retain more of their produce, reduce unnecessary waste and increase the availability of agricultural commodities in domestic markets.

Limited Storage Capacity Remains a Major Concern

Pakistan’s existing warehouse infrastructure is considerably smaller than the volume of agricultural commodities produced each year.

The SECP chairman cited approved warehouse capacity of approximately 326,000 metric tonnes, compared with annual production of around 55.7 million metric tonnes of dry agricultural commodities suitable for conventional storage.

This imbalance highlights the need for investment in modern warehouses, temperature-controlled storage and more efficient distribution networks.

Better storage facilities would allow farmers to preserve crop quality for longer periods. They could also help stabilize supplies, reduce seasonal pressure on prices and improve the reliability of agricultural exports.

Encouraging private investment in storage infrastructure could be an important part of addressing this challenge.

Digital Warehouse Receipts Could Open New Financing Opportunities

One of the most important elements of the proposed marketplace is its plan to introduce electronic warehouse receipts.

Under the proposed arrangement, farmers would store their produce in approved warehouses and receive electronic documents confirming the quantity and ownership of their stored commodities. These receipts could then be presented to banks as collateral for loans.

This mechanism could give farmers greater financial flexibility after harvesting. Many producers need immediate cash to repay existing debts, cover household expenses or prepare for the next growing season. As a result, they may have little choice but to sell their crops when market prices are relatively low.

Access to loans against stored produce could reduce this pressure and allow farmers to make selling decisions based on market conditions rather than urgent financial needs.

The system could also help connect agricultural production with formal banking services, although its success would depend on reliable warehouse operations, appropriate lending arrangements and effective protection against fraud.

Wheat, Rice, Maize, Cotton and Sugar in the Initial Phases

The SECP has proposed introducing the digital marketplace in stages, initially focusing on wheat, rice, maize, cotton and sugar.

Standardized grading and quality assessment would help ensure that commodities are evaluated according to consistent requirements. Transparent bidding would allow buyers to compete for available produce, potentially improving price discovery.

Digital records of transactions and commodity inventories could also make it easier to monitor market activity and reduce opportunities for manipulation.

The proposal further calls for the registration of traders and commission agents to improve accountability across the trading process.

However, digital systems will need to be supported by reliable payment arrangements, clear rules for resolving disputes and practical procedures for moving commodities between markets and storage facilities.

Better Price Discovery Could Strengthen Farmers’ Bargaining Power

Farmers often have limited access to information about prevailing prices in different markets. This can weaken their negotiating position, particularly when they depend on intermediaries to sell their produce.

A nationwide digital platform could help address this information gap by making bids and trading activity more transparent.

With access to a broader pool of buyers, farmers could potentially identify more competitive offers and make better-informed selling decisions. Standardized quality assessments could also help buyers distinguish between different grades of produce and pay accordingly.

Nevertheless, better prices would not be guaranteed automatically. The actual benefits would depend on the number of active buyers, the competitiveness of bidding, transportation costs and farmers’ ability to access the platform.

Ensuring that smallholders can participate on fair terms will be essential to achieving the proposal’s intended goals.

Coordination and Infrastructure Will Be Critical

Establishing a national agricultural spot market will require cooperation among provincial governments, financial institutions, warehouse operators, traders and technology providers.

Provincial differences in agricultural market regulations, licensing requirements, fees and commodity transportation procedures could create implementation challenges if they are not addressed effectively.

The country will also need sufficient certified warehouses, dependable quality inspection services and secure electronic recordkeeping systems.

Farmer awareness will be another important consideration. Training and accessible digital services could help rural communities understand how to use the platform, obtain financing and participate in competitive trading.

Without these supporting measures, the marketplace may struggle to deliver its full potential.

SECP Also Targets Broader Financial Market Reforms

In addition to the agricultural initiative, the SECP chairman discussed plans to expand participation in Pakistan’s capital markets.

The regulator aims to increase the stock market investor base to 2.5 million through measures that include financial education campaigns for young people and simpler procedures for opening investment accounts.

The SECP also highlighted the importance of investor protection, dependable financial reporting and stronger supervision of audit firms. An independent legal framework for overseeing audit firms was discussed as a way to improve corporate disclosures and reinforce confidence in the financial system.

These measures form part of a broader effort to encourage financial inclusion and improve transparency across Pakistan’s markets.

Conclusion

The proposed national agricultural spot market offers Pakistan an opportunity to improve agricultural trading through digital technology, better storage and stronger connections with the banking sector.

By enabling farmers to store their crops, access financing and participate in more transparent bidding, the initiative could help reduce post-harvest losses and improve their ability to negotiate competitive prices.

However, achieving these outcomes will require more than a digital platform. Investment in warehouses, effective regulation, reliable payments and inclusive access for small-scale farmers will be equally important.

If implemented successfully, the proposal could contribute to a more efficient agricultural supply chain, stronger rural incomes and a more resilient economy. The key challenge will be ensuring that the planned reforms translate into practical, measurable benefits for farmers throughout Pakistan.

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The State Bank of Pakistan (SBP) has introduced the second edition of its Banking on Equality (BoE) Policy for 2026, reaffirming its commitment to improving women’s access to financial services and promoting gender equality in the banking sector. The policy aims to reduce the gender gap in financial inclusion to 25% by 2028 as part of the National Financial Inclusion Strategy (NFIS).

The updated policy builds on the progress achieved since the launch of the original initiative in 2021. It introduces additional measures to encourage women’s participation in banking, expand digital financial services, support women-led businesses and improve access to financing across different economic sectors.

Progress in Women’s Financial Inclusion

Pakistan has made notable progress in reducing disparities in financial inclusion over the past few years. According to SBP, the gender gap in financial inclusion declined from 39% in 2021 to 29% in 2025.

The earlier Banking on Equality Policy also contributed to greater female representation in the banking workforce. Banks recruited more than 17,500 women during this period, while the proportion of female employees increased from 13% to 17%. Several banks also established dedicated departments and teams to develop financial products and services tailored to women’s needs.

Building on these achievements, the new policy aims to accelerate progress and address the remaining barriers that limit women’s participation in the formal financial system.

More Employment Opportunities for Women in Banking

One of the major priorities of BoE 2026 is to improve women’s representation and career development within financial institutions. The policy establishes targets relating to women’s recruitment, customer outreach and participation in branchless banking networks.

It also encourages banks to introduce workplace facilities, including daycare services for working mothers. In addition, financial institutions are advised to develop clear career progression policies that help women advance into senior management and leadership positions.

These measures are intended to create a more supportive working environment, improve employee retention and expand women’s professional opportunities within the banking industry.

Expanding Digital Banking Access

Digital financial services are another important focus of the updated policy. SBP aims to make banking more accessible to women through targeted digital onboarding campaigns, simplified account-opening procedures and digital payment solutions designed around their financial needs.

The policy also promotes the use of digital payments among women-led businesses. Better access to mobile banking, electronic transactions and other digital services can help women manage their finances more conveniently and participate more actively in economic activities.

By reducing barriers to opening and using accounts, these initiatives could also encourage greater participation among women who have traditionally remained outside the formal banking system.

Improving Financing for Women-Owned Businesses

Access to finance remains a significant challenge for many women entrepreneurs, particularly those operating micro, small and medium-sized enterprises (MSMEs). Limited credit histories, insufficient collateral and complex lending requirements can make it difficult for women to secure loans from traditional financial institutions.

To address these challenges, BoE 2026 encourages banks to increase the participation of women borrowers across key financing segments. It also promotes gender-sensitive credit planning and the development of specialized financing products that better reflect the needs of women-owned and women-led enterprises.

Financial institutions are encouraged to use alternative credit assessment methods, reconsider conventional collateral requirements where appropriate, and collaborate with fintech companies to expand lending opportunities.

These steps could help women entrepreneurs obtain the funding needed to establish businesses, expand operations, create employment and contribute to Pakistan’s economic development.

Strengthening Financial Literacy and Entrepreneurship

Improving access to banking services alone may not be sufficient to achieve meaningful financial inclusion. Women also need the knowledge, confidence and resources to make informed financial decisions.

Recognizing this need, the new policy emphasizes financial literacy, entrepreneurship development and support mechanisms that encourage women to engage with formal financial services.

Through dedicated support hubs and targeted educational initiatives, the policy seeks to improve women’s understanding of savings, borrowing, digital payments and business financing. Greater financial awareness can help women manage their resources effectively and make better use of available banking products.

Stronger Monitoring and Implementation

To ensure that the policy delivers measurable results, SBP plans to introduce a structured monitoring and evaluation framework. Banks will be required to provide quarterly data, while regular mystery shopping exercises will help assess how effectively financial institutions are implementing the policy’s requirements.

The use of gender-disaggregated data will also allow policymakers and banks to identify gaps in service delivery, monitor progress and develop more targeted financial products.

This approach is intended to strengthen accountability and ensure that the policy’s objectives translate into practical improvements for women across Pakistan.

Supporting National and International Financial Inclusion Goals

The Banking on Equality Policy 2026 forms part of SBP’s broader Vision 2028 and supports the country’s efforts to build a more inclusive financial system. It will also contribute to the implementation of the World Bank-led Women Entrepreneurship Finance Code initiative.

The policy was finalized following consultations with local and international stakeholders, reflecting a broader effort to improve women’s access to financial resources and economic opportunities.

SBP’s earlier efforts under the original policy were also recognized by the Alliance for Financial Inclusion (AFI), which presented the central bank with the Policy Achievement Award for Gender Inclusive Finance 2026.

Conclusion

The launch of the Banking on Equality Policy 2026 represents another step towards reducing gender disparities in Pakistan’s financial sector. By focusing on women’s employment, digital banking, business financing and financial education, SBP aims to create a more accessible and supportive financial environment.

Reducing the gender gap in financial inclusion to 25% by 2028 will require sustained cooperation between banks, regulators, technology providers and other stakeholders. Effective implementation and regular monitoring will be essential to achieving this target.

If successfully implemented, the policy could help more women gain access to financial services, establish and grow businesses, pursue professional advancement and participate more fully in Pakistan’s economic development.

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Pakistan’s efforts to attract and retain foreign investment face another administrative challenge as overseas investors raise concerns over delays in obtaining tax exemption certificates from the Federal Board of Revenue (FBR). The delays are creating obstacles for the registration of foreign-held shares with the State Bank of Pakistan (SBP), even in cases where the relevant share transactions have already been completed.

Investors are calling for a more efficient certification mechanism, clearer tax guidelines, and a defined timeline for processing applications. They have also urged the authorities to clarify whether Rule 19H of the Income Tax Rules applies to share transfers completed before the rule was introduced.

Tax Certification Requirements Create Uncertainty

Recent changes relating to Section 37 of the Income Tax Ordinance have raised concerns among stakeholders involved in cross-border share transactions. The requirements have introduced additional compliance considerations, particularly when shares in Pakistani companies are transferred between two non-resident parties.

Under the applicable framework, a non-resident buyer purchasing shares from another non-resident may be required to deduct tax from the transaction. However, where the seller is entitled to an exemption or a reduced tax rate under Pakistani law or an applicable double taxation agreement, the relevant tax certificate may be necessary to establish that entitlement.

Obtaining the certificate from the Commissioner Inland Revenue has reportedly become a lengthy process in some cases. As a result, investors face uncertainty about when their applications will be approved and whether they can complete the remaining regulatory formalities within a reasonable period.

Disputes Over the Application of Tax Provisions

Another concern relates to the interpretation of Section 101A of the Income Tax Ordinance. According to stakeholders, certain tax authorities have treated transactions between non-resident parties under this provision, contributing to difficulties in issuing exemption certificates.

Such interpretations can complicate transactions where investors believe that an exemption or a preferential tax treatment should apply. Without timely clarification from the relevant authorities, parties may struggle to determine their tax obligations and satisfy the documentation requirements associated with share transfers.

Investors believe that consistent interpretation of the relevant provisions is essential to reduce compliance risks and prevent administrative uncertainty from affecting legitimate commercial transactions.

SBP Registration Delays Affect Foreign Shareholders

The consequences extend beyond the tax certification process. Foreign investors must also complete the applicable registration formalities with the State Bank of Pakistan, and compliance with Rule 19H has reportedly become an important consideration in certain cases.

When an investor has acquired shares but cannot obtain the required tax documentation, the remaining registration process may be delayed. This creates a gap between the completion of a commercial transaction and the completion of the associated regulatory procedures.

Such delays can complicate investment records, create uncertainty over the recognition of shareholdings, and make it more difficult for investors to plan subsequent transactions. They may also increase the time and cost involved in maintaining investments in Pakistani companies.

Investors Seek Clarity on Retrospective Application

A major demand from foreign investors concerns the possible retrospective application of Rule 19H. Stakeholders want the authorities to clarify that transactions completed before the rule’s introduction should not be subjected to new requirements merely because their SBP registration remains outstanding.

The distinction is important because the underlying share transfer and its subsequent regulatory registration may occur at different times. Investors argue that a transaction completed under the rules applicable at the time should be assessed accordingly, rather than being delayed by uncertainty over later procedural requirements.

Clear transitional guidelines would help distinguish historical transactions from new acquisitions and reduce disagreements between investors and regulatory authorities.

Time-Bound Certificates Could Improve the Process

To address these concerns, investors are seeking practical reforms that would make the certification process more predictable. Key proposals include:

• Defined processing timelines: The FBR should establish clear deadlines for deciding applications for tax exemption or reduced-rate certificates.
• Consistent interpretation of tax laws: Detailed guidance should explain how Sections 37 and 101A apply to share transfers between non-residents.
• Clear transitional arrangements: The authorities should clarify the treatment of transactions completed before the introduction of Rule 19H.
• Improved coordination between regulators: The FBR and SBP should align their documentation requirements to minimize unnecessary delays.
• Transparent application procedures: Investors should have access to clear eligibility criteria, documentation checklists, and information about the status of pending applications.

These measures could help reduce uncertainty without compromising the government’s responsibility to ensure compliance with tax laws.

Implications for Pakistan’s Investment Climate

A predictable regulatory environment is an important consideration for international investors deciding where to allocate capital. While taxation and regulatory oversight are necessary, lengthy administrative procedures can undermine investor confidence when they prevent the completion of otherwise finalized transactions.

For Pakistan, resolving these concerns could help improve the ease of doing business and demonstrate a commitment to transparent investment procedures. Delays in tax certification and share registration may also influence how foreign investors assess the risks associated with future investments and corporate transactions.

A coordinated response from the FBR and SBP would therefore serve a broader purpose than resolving individual applications. It could establish a more consistent framework for cross-border share transfers and reduce uncertainty for investors operating in Pakistan.

Conclusion

The concerns raised by foreign investors highlight the need for greater clarity and efficiency in Pakistan’s tax certification and investment registration procedures. Delays in obtaining exemption certificates, uncertainty over the interpretation of relevant tax provisions, and questions about the retrospective application of Rule 19H are creating difficulties for investors seeking to complete SBP registration.

Introducing time-bound decisions, issuing clear legal guidance, and improving coordination between the FBR and SBP could help address these challenges. A transparent and predictable system would support regulatory compliance while strengthening investor confidence in Pakistan’s financial and corporate environment.

Ultimately, efficient tax administration and clear investment rules are essential to ensuring that regulatory procedures facilitate legitimate business activity rather than become an obstacle to it.

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According to the World Bank’s October 2026 economic outlook for the Middle East, North Africa, Afghanistan and Pakistan region, Pakistan’s economic growth is expected to improve to 3.7% in FY2025-26, compared with an estimated 3.2% in FY2024-25.

The forecast is significant because it comes at a time when the wider region is facing one of its most serious energy shocks in years.

Hormuz Disruption Creates a Global Energy Shock

The conflict that began in the Persian Gulf on February 28, 2026, has severely disrupted shipping through the Strait of Hormuz, one of the world’s most important energy routes.

A substantial share of global oil and liquefied natural gas shipments normally passes through the narrow waterway. The disruption sharply reduced tanker traffic and contributed to a major decline in regional oil production.

Oil prices responded quickly. Brent crude climbed above $100 per barrel in March, before easing toward approximately $70 in June as tensions temporarily moderated. Prices later moved higher again as the conflict intensified.

The World Bank expects energy prices to remain elevated for the remainder of 2026, creating challenges for countries that depend heavily on imported fuel.

Pakistan Feels the Impact Through Higher Costs

Pakistan does not have the same exposure as major Gulf oil and gas exporters because it is primarily affected through the cost of imported energy rather than a loss of domestic hydrocarbon production.

Nevertheless, the consequences are being felt across the economy.

Fuel prices have increased substantially since the beginning of the conflict. Gasoline prices have risen by 40% or more, while diesel prices have increased by over 40%.

Higher fuel costs can quickly spread through the economy because transportation, agriculture, manufacturing and logistics all depend heavily on petroleum products.

The increase in freight and insurance costs has added another layer of pressure, making imported goods more expensive and potentially widening Pakistan’s external financing requirements.

Inflation Remains a Major Concern

Economic growth may be holding up, but inflation remains one of Pakistan’s biggest challenges.

The World Bank estimates that inflation climbed to around 11% by the middle of the year, as higher energy and transportation costs began feeding into domestic prices.

For households, rising fuel prices can have effects far beyond the petrol station. Transportation becomes more expensive, food distribution costs increase and businesses face higher operating expenses. These costs can eventually be passed on to consumers.

The government has responded with targeted measures aimed at supporting fuel consumers and the agricultural sector. However, policymakers must balance assistance to households with the need to avoid putting excessive pressure on public finances.

Services and Manufacturing Support Growth

Despite these difficulties, several parts of Pakistan’s economy have remained relatively strong.

The services sector continues to provide an important foundation for economic activity, while manufacturing has shown resilience despite higher production and import costs. Livestock production has also contributed to economic stability.

This domestic strength is helping offset some of the negative effects of the external energy shock.

The World Bank’s forecast therefore suggests that Pakistan’s economy is not immune to the crisis, but its underlying domestic activity is strong enough to keep growth moving forward.

Pakistan Performs Better Than Regional Oil Exporters

Pakistan’s projected growth stands in sharp contrast to the outlook for several energy-producing economies in the region.

The World Bank expects the broader MENAAP economy to contract by 2.1% in 2026. GCC economies are projected to shrink by 4.3%, while developing oil exporters could experience a contraction of around 5.4%.

The difference is largely explained by the nature of the current energy shock.

During previous oil-price crises, higher crude prices often benefited oil-producing countries by increasing their export revenues. This time, however, the major problem is not simply the price of oil. It is the ability to physically produce and transport it.

With shipping through the Strait of Hormuz disrupted, some oil and gas exporters are unable to take full advantage of higher international prices because their export volumes have been reduced.

Global Economy Has So Far Absorbed the Shock

Despite the scale of the disruption, the impact on global economic growth has so far been relatively limited.

Several factors have helped cushion the supply shock, including existing oil inventories, alternative transportation routes, additional production from other sources and weaker energy demand in parts of East Asia.

As a result, the World Bank has reduced its forecast for global growth in 2026 by only 0.1 percentage point, from 2.6% to 2.5%.

However, this relatively limited impact should not be interpreted as a guarantee that the crisis will remain contained.

Risks Could Increase if the Conflict Continues

The biggest concern for Pakistan and other energy-importing countries is the possibility of a prolonged disruption.

The World Bank’s baseline scenario assumes that conflict-related disruptions will begin easing from early 2027. If the conflict continues for longer or becomes more intense, energy prices could remain elevated for an extended period.

For Pakistan, that could mean higher import costs, greater inflationary pressure and increased strain on external balances.

A prolonged crisis could also affect investment, consumer spending and industrial production if businesses and households face persistently higher energy and transportation costs.

A Resilient Economy Facing a Difficult Test

Pakistan’s projected 3.7% growth is an encouraging sign at a time when much of the surrounding region is under severe economic pressure.

The country has so far managed to maintain domestic economic activity despite higher fuel, freight and commodity costs. Services, manufacturing and livestock are providing important support, while targeted government measures are helping cushion some of the impact on households and producers.

But the road ahead remains uncertain.

Pakistan’s resilience will ultimately depend on how long the Hormuz disruption lasts, where international oil prices settle and how effectively the government can control inflation without placing excessive pressure on public finances.

For now, the World Bank’s assessment offers a cautiously optimistic message: Pakistan is absorbing the regional energy shock, and its economy continues to grow—but rising fuel prices and inflation remain significant threats to that momentum.

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Under the proposed arrangement, the Head of the DMO will play a central role in shaping the government’s borrowing strategy, managing financial risks and ensuring that debt policies remain aligned with broader economic and fiscal objectives.

A major responsibility of the new DMO leadership will be the implementation of the Medium-Term Debt Management Strategy (MTDS) and the Annual Borrowing Plan (ABP). These plans will be carried out in line with the requirements of the Fiscal Responsibility and Debt Limitation (FRDL) Act, 2025.

Greater Focus on Borrowing and Debt Risks

The strengthened DMO will oversee both domestic and international borrowing programmes. This will include decisions about when and where the government should access financial markets, as well as which financing instruments are most appropriate.

The objective will be to balance borrowing costs against potential risks. This is particularly important as changes in interest rates, exchange rates and market conditions can significantly affect the government’s debt-servicing burden.

The DMO will also monitor key risks associated with refinancing, interest rates and contingent liabilities. A more structured risk-management framework could help the government anticipate potential pressures before they become major fiscal challenges.

Diversifying Sources of Government Financing

Another important aspect of the reform is the planned diversification of government funding.

Rather than relying heavily on a limited number of borrowing channels, the DMO is expected to explore a broader mix of domestic and external debt instruments. The choice of financing would be guided by considerations such as cost, maturity, market conditions and associated risks.

Greater diversification could give the government more flexibility when domestic or international financial conditions become difficult.

Stronger Coordination with Financial Institutions

The Head of the DMO will also serve as a key point of coordination between the government and major financial institutions and stakeholders.

This will include engagement with the Finance Secretary, State Bank of Pakistan, Economic Affairs Division, International Monetary Fund, development partners, investors and international credit-rating agencies.

Such coordination is particularly significant for Pakistan, where access to international financing and investor confidence can have a direct impact on the government’s ability to meet its financing requirements.

Improving Transparency and Investor Communication

The proposed changes also place greater emphasis on communication and transparency.

The DMO will be responsible for communicating government debt policies, financing plans and its position in financial markets. It will also oversee the timely publication of statutory debt reports and fiscal-risk information.

Better and more consistent communication could help investors and other stakeholders understand the government’s borrowing requirements and long-term debt strategy.

The office will further contribute to federal budget preparation, debt sustainability assessments and compliance with debt-data reporting requirements.

Building a More Professional Debt Management System

Beyond borrowing and reporting, the strengthened DMO will focus on developing its own institutional capacity.

The Head of the office will be expected to build technical expertise, improve internal controls and promote international best practices in public debt management. The DMO will also advise the government on major debt-related policy decisions under the FRDL Act, 2025.

This represents a broader shift toward treating public debt management as a specialized financial function rather than simply an administrative task.

What the Reform Could Mean for Pakistan

Pakistan’s fiscal position makes effective debt management particularly important. A large debt burden can limit the government’s room for development spending and increase vulnerability to changes in interest rates, exchange rates and global financial conditions.

A stronger and more professionally led DMO could help address some of these challenges by providing a more coordinated approach to borrowing and risk management.

The success of the initiative, however, will depend not only on the creation of a dedicated leadership position but also on the authority, expertise, data access and institutional capacity provided to the DMO.

If effectively implemented, the reform could help Pakistan move toward a more predictable, transparent and risk-conscious borrowing framework while supporting the government’s broader goals of fiscal stability and long-term debt sustainability.

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The biggest contribution to this increase has come from non-salaried taxpayers, including traders, shopkeepers, professionals and self-employed individuals.

Non-Salaried Taxpayers Lead the Expansion

Returns submitted by non-salaried individuals climbed to approximately 3.81 million, compared with 2.38 million a year earlier. This represents an increase of around 60 percent and accounts for the majority of the additional filings recorded during the year.

The growth also highlights how significantly the composition of Pakistan’s tax-filing population has changed over time. Five years ago, non-salaried individuals filed fewer than one million returns. Today, they account for roughly two-thirds of the country’s total income tax returns.

Salaried taxpayers also increased their participation. Returns filed by salaried individuals reached around 1.9 million, marking a 22 percent increase over the previous year.

Tax Filing Base Nearly Triples Since 2022

The latest numbers show a substantial long-term expansion in the number of people submitting tax returns.

By the end of September, the number of returns stood at approximately 1.86 million in 2022. It increased marginally to 1.92 million in 2023 before rising sharply to 3.72 million in 2024. The figure then reached 3.98 million in 2025 and 5.77 million in 2026.

This means the number of returns filed by September has almost tripled in just four years.

The increase could reflect a combination of greater enforcement, expanding documentation of economic activity and growing participation in the formal tax system.

More Taxpayers Reporting Taxable Income

The increase was not limited to people filing returns with no tax liability. Returns showing income above the taxable threshold also rose substantially.

Nearly 2.5 million such returns were filed this year, compared with approximately 1.82 million last year, representing growth of around 37 percent.

Non-salaried taxpayers again recorded particularly strong growth, with returns above the taxable threshold increasing by about 47 percent. Among salaried individuals, the corresponding increase was around 32 percent.

The number of taxpayers showing tax payments with their returns also increased by approximately 38 percent to 3.35 million.

Among non-salaried taxpayers, payment filers rose by around 50 percent to approximately 1.75 million.

Filing Growth Has Not Translated Into Higher Return-Based Tax Payments

Despite the sharp increase in filings, tax paid alongside returns declined.

Individuals paid around Rs34.5 billion with their returns, an increase of approximately 11 percent from the previous year. Associations of persons, including partnerships, contributed another Rs3.7 billion, up around 16 percent.

However, company payments fell considerably.

Companies reported around Rs39.1 billion in tax paid with their returns, compared with approximately Rs49 billion during the same period last year.

As a result, total tax paid with returns dropped to about Rs77.3 billion from Rs83.3 billion, representing a decline of roughly 7 percent.

The figures therefore reveal an important distinction: Pakistan is seeing strong growth in tax filing, but that growth has not yet produced a corresponding increase in tax payments made through returns.

Nil Returns Remain a Significant Feature

Another important aspect of the latest data is the continued prevalence of nil returns.

Around 39 percent of returns submitted during the period reportedly showed no tax payable, a proportion broadly similar to last year.

While nil returns still contribute to documentation and visibility within the tax system, their large share means that an increase in the number of returns does not automatically translate into higher government revenue.

For policymakers, the next challenge may therefore be to convert the expansion in the filing population into a broader and more productive tax base.

Company Filings Decline

The corporate sector recorded a different trend from individuals.

Only around 7,953 company returns had been submitted by September 30, compared with 11,206 during the same period last year.

The FBR has attributed much of the decline to timing issues, noting that many companies had delayed filing while waiting for an extension of the deadline. With the deadline subsequently extended, officials expect the number of company returns and related tax payments to increase in the coming weeks.

Consequently, the current company figures may not provide a complete picture of corporate tax compliance for the year.

A Growing but Evolving Tax Base

Pakistan’s latest tax filing figures demonstrate a clear expansion in participation, particularly among non-salaried individuals. The increase from fewer than two million returns five years ago to almost 5.8 million today represents a major change in the size of the documented taxpayer population.

However, the decline in total tax paid with returns shows that the number of filers and the amount of revenue generated are not necessarily moving at the same pace.

The coming months will be important in determining whether the surge in filings translates into stronger revenue collection. Company filings after the extended deadline, continued growth among non-salaried taxpayers and the proportion of returns reporting taxable income will all provide a clearer picture of how effectively Pakistan’s expanding tax net is translating into actual revenue.

For now, the numbers point to a tax system that is reaching a significantly larger number of individuals, particularly outside the traditional salaried workforce, while still facing the challenge of turning wider participation into sustained revenue growth.

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Under the new arrangement, commercial bank branches across the country will remain open until 10:00 PM on Wednesday, September 30, 2026. The decision was made following a request from the Federal Board of Revenue (FBR) to provide taxpayers with additional time to complete their payments.

Bank Branches to Remain Open Late

Taxpayers who need to make payments through bank counters will be able to visit designated commercial bank branches during the extended hours. The measure is particularly aimed at facilitating over-the-counter (OTC) payments of government taxes and duties.

Banks have also been instructed to keep relevant branches operational for as long as necessary to support the special clearing of government transactions conducted by the National Institutional Facilitation Technologies (NIFT).

Digital Payment Services to Continue

The SBP has also emphasized the continued availability of digital payment facilities. Banks are required to ensure that their internet banking services, mobile applications, ATMs, and other online payment platforms remain available without interruption.

This will allow taxpayers who prefer digital transactions to submit their government payments without having to visit a physical bank branch.

Additional Relief for Taxpayers

The extended banking schedule provides taxpayers with additional flexibility on the final day for government tax and duty payments. Those who have yet to complete their payments can use either the extended branch hours or available digital banking channels.

The move is intended to ensure that payment processing continues smoothly and that taxpayers have sufficient access to banking facilities during the deadline period.

Conclusion

With commercial banks extending their branch timings until 10:00 PM on September 30, taxpayers have additional options for completing government tax and duty payments. The continued availability of digital banking services also provides an alternative for those who prefer to make payments online.

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According to officials familiar with the discussions, the FBR briefed the IMF delegation on the country’s tax collection performance and explained the factors responsible for the shortfall recorded during August.

The tax authority collected its targeted revenue in July but remained approximately Rs28 billion below its August target. Despite this gap, FBR officials told the IMF that September collections are expected to make up the difference.

The FBR has set a September collection target of Rs1.330 trillion and expects to achieve the amount. Officials believe that meeting the September target will allow the revenue authority to reach its overall first-quarter commitment of Rs3.053 trillion.

Income Tax Returns Show Stronger Filing Activity

The number of income tax returns submitted for Tax Year 2026 was another key issue discussed during the IMF talks.

FBR officials informed the delegation that approximately 4.7 million income tax returns had been filed so far. During the corresponding period last year, the number stood at around 3.2 million.

This represents an increase of approximately 1.52 million returns, indicating a substantial rise in filing activity compared with the previous year.

The legal deadline for filing income tax returns is September 30, 2026. The FBR is expected to review the number of returns received before deciding whether taxpayers should be granted additional time.

Officials have indicated that an extension could be considered if filing trends and requests from taxpayers and other stakeholders justify such a move. However, any extension would only become effective after an official announcement from the FBR.

Civil Servants Face New Asset Disclosure Requirements

The IMF discussions also covered Pakistan’s efforts to strengthen financial disclosure requirements for government employees.

Officials briefed the IMF on legislation introduced to establish a framework for monitoring the financial affairs of civil servants. A new Section 15-A of the Civil Servants Act provides the legal basis for regulating and monitoring the financial conduct of public servants.

Under the new arrangements, federal civil servants in grades 17 to 22 will be required to submit their asset declarations electronically by October 30, 2026.

The framework also provides for public disclosure of assets belonging to officers in these grades, while certain restricted information is scheduled to be made public by December 31, 2026, in accordance with the timeline agreed with the IMF.

The Establishment Division secretary has briefed the IMF delegation on the legal and administrative steps being taken to put the new disclosure system into operation.

Auto Policy and Tariff Reforms Also Under Discussion

Pakistan’s broader economic reform agenda also remains part of its engagement with the IMF.

Officials are expected to brief the Fund on the proposed five-year automotive policy, which is aimed at shaping the direction of the country’s automobile sector.

The Ministry of Commerce is also expected to discuss the National Tariff Policy, along with changes made to import and export regulations.

These discussions form part of Pakistan’s wider engagement with the IMF as the government works to meet its revenue commitments and implement structural reforms.

Outlook

For the FBR, September will be particularly important. Although the revenue authority missed its August target, it maintains that stronger collections during September will enable it to close the first quarter at the committed level of Rs3.053 trillion.

At the same time, the sharp rise in tax-return filings and the implementation of new asset-declaration rules represent important developments in Pakistan’s tax and public-sector administration.

The final first-quarter revenue figures, along with any decision regarding an extension of the tax-return deadline, will provide a clearer picture of whether the FBR has delivered on the commitments communicated to the IMF.

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Under the new arrangement, the FBR has established a National Faceless Centre (NFC) in Islamabad, which will initially focus on reviewing tax-related information of hundreds of thousands of individuals. The initiative is part of the government’s broader effort to modernize tax administration, improve compliance and reduce direct interaction between taxpayers and tax officials.

New System to Monitor High-Value Spending

The first stage of the programmed is expected to begin on October 1, with the NFC initially handling information relating to approximately 300,000 to 400,000 individuals.

The FBR plans to make greater use of third-party information to identify cases that may require further examination. Among the information expected to receive particular attention are records involving:

• Air travel and frequent expensive trips

• Purchases of luxury vehicles

• Ownership or purchase of high-value residential properties

• Other significant expenditures that may appear inconsistent with declared income

The purpose is not necessarily to tax every person who makes an expensive purchase. Instead, such transactions may prompt the tax authorities to ask the individual to explain the source and tax treatment of the funds involved.

Taxpayers Will Have an Opportunity to Explain

If a taxpayer receives a notice, they will be required to provide an explanation or supporting evidence for the expenditure in question.

For example, an individual may be able to demonstrate that a major purchase was financed through accumulated savings, a bank loan, the sale of another asset, inheritance or another legitimate source of funds.

Where the explanation is accepted, the matter may be closed. If the expenditure cannot be adequately explained, the taxpayer may be required to pay the relevant tax and make the necessary changes to their tax return.

The proposed system will also provide digital facilities for completing tax payments.

No Direct Contact With the Tax Officer

One of the most notable features of the new system is the removal of direct interaction between taxpayers and individual tax officers.

Under the traditional system, taxpayers whose returns were selected for audit could find themselves dealing directly with a particular officer at a regional tax office. The new model aims to replace this arrangement with a centralized digital process.

Cases will be selected through a computerized, risk-based mechanism. Once selected, a case will automatically be allocated to an officer, who could be located anywhere in Pakistan.

The taxpayer will not be told which officer is handling the case, while the officer will not have any involvement in selecting the taxpayer for audit.

Three Officers for Three Different Stages

The proposed structure also separates the different stages of an audit.

Instead of allowing one officer to control a case from beginning to end, the process will involve three separate functions:

1. Audit: One officer examines the taxpayer’s information and relevant data.

2. Assessment: A second officer reviews the case and determines the applicable tax position.

3. Quality review: A third officer checks the work before the final order is issued.

According to the FBR, separating these responsibilities is intended to strengthen oversight and reduce the possibility of undue influence during the tax process.

Initial Focus on Individual Taxpayers

During its initial phase, the NFC will concentrate on individual and medium-level cases. Corporate taxpayers and associations of persons are not included in the initial scope of the new arrangement.

The center will initially operate with 27 officers, with third-party information expected to be transferred to it in stages following preliminary compliance checks.

Wider Centralization Planned for 2027

The current initiative is only the first stage of a much larger reform.

A second phase is planned for June 2027, when the FBR intends to bring the audit and assessment functions of regional tax offices under the centralized model.

If implemented as planned, this would represent a major change in the way tax cases are processed across Pakistan.

Rather than taxpayers dealing primarily with their local tax office, cases would increasingly be handled through a nationwide digital structure.

Reducing Harassment and Improving Transparency

The FBR says the faceless approach is intended to reduce unnecessary physical interaction between taxpayers and tax officials. The reform is also designed to address concerns surrounding corruption, undue influence and taxpayer harassment.

Because cases would be selected and assigned electronically, individual officers would have less control over which taxpayers they deal with.

The separation of audit, assessment and review functions is another safeguard intended to create greater oversight within the process.

Pakistan Following an International Trend

Faceless and centralized tax administration is not unique to Pakistan. Similar approaches have been adopted in several countries, including the United Kingdom, Australia, the Netherlands, Singapore and India.

India, in particular, has operated a comparable faceless assessment framework for individual taxpayers since 2019.

Pakistan’s proposed model reflects the broader international movement towards using digital systems, data analytics and automated case allocation to modernize tax administration.

What Taxpayers Should Expect

The new system means that high-value financial activity could receive greater scrutiny when it does not appear consistent with information reported to the tax authorities.

For taxpayers, maintaining proper financial records and documentation will therefore become increasingly important. Evidence relating to major purchases, loans, asset sales, inheritances, investments and other sources of funds can help establish the legitimacy of significant expenditures if questions arise.

The reform also signals a broader shift in Pakistan’s tax system: tax administration is moving away from office-based interactions and towards data-driven digital enforcement.

Conclusion

The establishment of the National Faceless Centre marks an important step in the FBR’s attempt to reshape tax audits in Pakistan. By combining third-party data, computerized case selection, nationwide officer allocation and separate audit and assessment functions, the new model seeks to create a more centralized and technology-driven tax system.

The immediate focus will be on individual taxpayers and high-value expenditure, while the planned 2027 expansion could extend the faceless model across regional tax offices.

For taxpayers, the message is clear: as the FBR increasingly relies on digital information to identify potential discrepancies, accurate tax returns and proper documentation of major financial transactions will become increasingly important.

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According to the latest figures, 317 retailers have submitted returns under the scheme. However, only two of them were previously outside the income tax system. The remaining 315 were already registered taxpayers, suggesting that the initiative has so far had limited success in expanding the tax base.

Revenue Far Below Government Target

The scheme has collected approximately Rs26 million in tax revenue so far. This is considerably below the government’s annual target of Rs50 billion.

With roughly a week left before the filing deadline, authorities are trying to encourage more retailers to complete the process. The current average payment works out to approximately Rs81,944 per participating retailer.

The two newly registered taxpayers who have completed their returns reportedly belong to Quetta and Rawalpindi. In addition, 44 other new retailers had prepared their returns but had not formally submitted them at the time of the latest review.

While around 5,000 retailers have registered for the simplified facility, only a small proportion have actually completed their tax filings.

Government Intensifies Outreach

The government is now increasing efforts to promote the scheme among traders. Minister of State for Finance and Railways Bilal Azhar Kayani recently reviewed the progress of the initiative and called for greater efforts ahead of the deadline.

FBR officials across the country have been instructed to conduct awareness campaigns and cooperate with trader associations and local tax bars. The objective is to explain the registration and filing process and address concerns that may be preventing shopkeepers from participating.

Tax commissioners have also been directed to maintain contact with local tax representatives so that traders can obtain assistance from tax professionals of their choice.

What Does the Scheme Offer Retailers?

The Aasaan Tax Scheme provides a simplified method of meeting tax obligations. Under the arrangement, participating retailers pay a fixed tax equal to 1% of their sales.

The scheme also provides certain concessions. Retailers using the facility are reportedly exempt from tax audits and some requirements concerning digital transaction systems.

Businesses that do not wish to use the simplified system can instead continue filing their regular income tax returns under the existing tax framework.

However, traders who fail to comply with either system may face penalties. The reported fines are Rs10,000 for the first month of non-compliance, Rs25,000 for the second month and Rs50,000 for the third month.

FBR Relies on Trader Associations

A significant part of the government’s strategy is the involvement of trader representatives. The FBR has collected information about representatives from different parts of the country and plans to involve them in visits to markets alongside tax officials.

The aim is to create direct communication between government officials and shopkeepers, allowing retailers to receive information about the scheme and assistance with completing the required procedures.

The government considers this approach important because trader representatives were involved in the design and implementation of the latest scheme.

Another Attempt to Expand the Tax Base

The Aasaan Tax Scheme follows the earlier Tajir Dost initiative, which was also introduced to increase tax compliance among retailers. That programmed failed to generate the level of participation and revenue that authorities had hoped for.

The latest initiative is intended to provide a simpler alternative for small businesses, particularly those that may find the conventional tax system complicated.

However, the low number of new taxpayers so far remains a key challenge. Turning registrations into completed returns will be crucial if the government wants the scheme to make a meaningful contribution to broadening the tax base.

Overall Tax Filing Numbers Rise

The limited response from new retailers comes at a time when overall income tax filing has reportedly increased.

The FBR has received approximately 3.5 million income tax returns so far this year, compared with around 2.5 million during the corresponding period of the previous financial year. Tax payments have also reportedly reached about Rs10 billion.

With the deadline approaching, the government has only a short period to persuade registered retailers to complete their filings. The final participation figures will provide a clearer indication of whether the Aasaan Tax Scheme can succeed in attracting previously undocumented retailers into Pakistan’s formal tax network.

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Under the latest directive issued on September 18, taxpayers will now have until September 30, 2026, to submit their August returns. The relief has been extended to taxpayers across the board, subject to a key condition regarding payment of the applicable sales tax liability.

Payment Must Have Been Made on Time

The extension provides additional time for filing the relevant returns; however, it does not change the original deadline for depositing the due sales tax liability.

Taxpayers seeking to benefit from the extended filing period must have paid their sales tax liability within the originally prescribed due date. Therefore, businesses that have fulfilled their payment obligation on time can use the additional period to complete and submit their returns.

FBR Issues Formal Directive

The FBR issued the extension under the legal authority granted by Section 74 of the Sales Tax Act, 1990, and Section 43 of the Federal Excise Act, 2005.

The directive was circulated to Chief Commissioners Inland Revenue serving at Large Taxpayers Offices (LTOs), Corporate Tax Offices (CTOs), and Regional Tax Offices (RTOs).

What the Extension Means for Taxpayers

The decision gives eligible taxpayers additional time to finalize their August 2026 sales tax and federal excise filings. The revised deadline of September 30 is particularly relevant for businesses that have already deposited their required sales tax but still need additional time to complete the return filing process.

It is important for taxpayers to understand that the extension applies to return submission, while the requirement to deposit the due sales tax within the original deadline remains unchanged.

Final Deadline: September 30

With the latest FBR directive, eligible taxpayers should ensure that their August 2026 sales tax and federal excise returns are submitted no later than September 30, 2026.

Businesses should also maintain records confirming that their applicable sales tax liability was deposited within the original prescribed timeframe, as this is the condition attached to the filing extension.

The FBR’s move provides additional filing time while keeping the existing payment requirement intact, allowing compliant taxpayers to complete their August tax returns within the revised deadline.

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