WHAT IS CUSTOM DUTY FOR IMPORTS IN PAKISTAN?

Custom duty in Pakistan is a form of indirect tax levied on goods imported into the country. It is regulated by the Federal Board of Revenue (FBR) under the provisions of the Pakistan Customs Act, 1969 and is enforced through the Pakistan Customs Tariff (PCT). The main objective of custom duty is to generate revenue, protect domestic industries, encourage local manufacturing, and control the flow of goods into the country.

As of 2025, Pakistan’s custom duty framework continues to evolve based on international trade agreements, local economic needs, and budgetary goals. Here is an updated overview of the structure, types, and applicability of custom duties on imports.

Purpose of Custom Duty in Pakistan

• Revenue Generation: A significant source of government revenue.

• Trade Regulation: Helps control the quantity and quality of imports.

• Domestic Protection: Shields local industries from excessive foreign competition.

• Balance of Payments Control: Reduces trade deficits by discouraging excessive imports.

Types of Custom Duties on Imports in Pakistan (2025)

1. Basic Customs Duty (BCD):

   • This is the standard import duty applicable on almost all goods.

   • Rates typically range from 0% to 35%, depending on the nature of goods and their HS (Harmonized System) code.

   • Specified in the First Schedule of the Pakistan Customs Tariff (PCT).

2. Additional Customs Duty (ACD):

   • Imposed under Section 18(3) of the Customs Act.

   • Usually applied on top of the BCD for selected items, especially luxury or non-essential imports.

   • The standard rate ranges from 2% to 7%, although certain items may be subject to higher rates.

   • Notified through Statutory Regulatory Orders (SROs) and budgetary laws.

3. Regulatory Duty (RD):

   • Levied to control the import of specific goods, especially to discourage non-essential or harmful imports.

   • Frequently used as a policy tool to stabilize foreign exchange reserves.

   • RD can range from 5% to 100% depending on the product type.

   • Applied via SROs issued by the FBR and revised periodically.

4. Sales Tax on Imports:

   • Standard 18% Sales Tax applies to most imported goods.

   • Collected at the import stage under the Sales Tax Act, 1990.

   • Exemptions or reduced rates may apply for essential items, raw materials, and PCT-based incentives.

5. Federal Excise Duty (FED):

   • Applied on specific categories of goods such as tobacco products, beverages, motor vehicles, and luxury goods.

   • Varies depending on product type – can be a percentage or fixed amount per unit.

   • Also applicable on selected imported services.

6. Customs Valuation Duty:

   • Duties are calculated based on the assessable value of goods, which is determined under the Valuation Rules, 2000 using:
     • Transaction value method
     • Identical/similar goods method
     • Deductive or computed value method

7. Advance Income Tax on Imports:

   • Collected at import stage under Section 148 of the Income Tax Ordinance, 2001.

   • Treated as advance tax adjustable against the taxpayer’s annual income tax liability.

   • Rates vary based on the importer’s status (ATL vs. Non-ATL) and product category.

Key Influencing Factors for Custom Duties

• Nature and HS Code of Goods:

• Each product is assigned a tariff code that determines applicable rates.

• Trade Agreements and FTAs:

• Pakistan’s Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with countries like China, Malaysia, Sri Lanka, and members of SAFTA provide concessional or zero-duty access to specific goods.

• Importer’s Profile:

• Active Taxpayers (on the ATL) enjoy lower rates for Advance Income Tax and sometimes preferential treatment.

• Government Budget and SROs:

• Duties and exemptions are frequently revised through annual Finance Acts and SROs, so businesses must stay updated.

How to Check Applicable Custom Duty?

Importers can verify applicable duties using the following tools:

• Pakistan Customs Tariff (PCT) available on www.fbr.gov.pk

• WeBOC Portal (Web-Based One Customs) for automated import declarations

• FBR Valuation Rulings for updated price assessments

• SROs (Statutory Regulatory Orders) for special exemptions and duties

Penalties and Non-Compliance

Failure to comply with customs regulations may result in:

• Confiscation of goods

• Heavy penalties or fines

• Suspension of WeBOC access

• Blacklisting from import activities