Section 148 of the Income Tax Ordinance 2001 sets out advance tax collection on imported goods, including valuation rules, minimum tax provisions and exemptions for specified transactions.
ISLAMABAD: The Federal Board of Revenue (FBR) has outlined provisions governing the collection of advance income tax on imported goods for Tax Year 2027, under Section 148 of the Income Tax Ordinance 2001, updated up to June 30, 2026.
The tax year covers the period from July 1, 2026, to June 30, 2027. Under the law, the Collector of Customs is responsible for collecting advance tax from importers at the rates specified in Part II of the First Schedule for goods classified under Parts I to III of the Twelfth Schedule.
The FBR may add, remove or amend entries in the Twelfth Schedule through a notification published in the official Gazette.
The law also allows the Board to treat certain goods classified under Part III as goods under Part II when they are imported as raw materials for an industrial or other specified person’s own use, subject to prescribed conditions and procedures.
However, the Collector of Customs is not required to collect tax under Section 148 where the recipient of goods is also liable to tax under the Digital Presence Proceeds Tax Act, 2025, and the relevant tax has already been collected by a payment intermediary as defined under Section 153.
Advance tax collection at customs clearance
Under Section 148(5), advance tax must be collected in the same manner and at the same time as customs duty payable on imported goods.
Where goods are exempt from customs duty, the tax is collected at the time when customs duty would have been payable if the goods were subject to the duty.
Section 148(6) provides that relevant provisions of the Customs Act 1969 apply to the collection of advance tax, subject to the limitations specified in the law.
The FBR is also empowered under Section 148(6A) to determine the minimum value of goods for advance tax collection through a notification in the official Gazette.
Advance tax treated as minimum tax
Section 148(7) provides that advance tax collected on imports generally constitutes minimum tax on the importer’s income arising from the relevant imports.
However, this provision does not apply where an industrial undertaking imports goods for its own use, subject to the terms of the law.
A separate provision under Section 148(7A) specifies that advance tax collected on imports of certain goods is treated as minimum tax on the income of every person arising from those imports.
The specified goods include:
• Edible oil
• Packaging material
• Paper and paperboard
• Plastics
The Board may add, remove or amend entries in this list through a notification in the official Gazette, subject to the approval of the minister in charge.
Definition of Collector of Customs
Section 148(9) defines the Collector of Customs as a person appointed under Section 3 of the Customs Act 1969. The definition also includes Deputy Collectors, Additional Collectors and other customs officers appointed under the relevant provision.
This definition establishes the officials responsible for administering the collection of advance tax on imports.
How the value of imported goods is determined
The law specifies different valuation methods for calculating advance tax, depending on the category of imported goods.
1. Goods subject to retail-price taxation
For goods chargeable to tax at retail price under the Third Schedule of the Sales Tax Act 1990, the value is based on the retail price increased by the sales tax payable on import and taxable supply of the goods.
2. Other imported goods
For goods outside the retail-price category and the minimum-value category, the value is determined under the Customs Act 1969 as if the goods were subject to ad valorem duty. The value is then increased by the customs duty, federal excise duty and sales tax, where applicable, payable on import.
3. Goods subject to a notified minimum value
Where the FBR has notified a minimum value under Section 148(6A), that value is used for advance tax purposes, with the applicable customs duty, federal excise duty and sales tax added as provided under the law.
These valuation rules determine the base on which advance tax is collected at the import stage.
The provisions under Section 148 form part of Pakistan’s income tax framework for Tax Year 2027 and establish the mechanism for collecting advance tax on imports, subject to the applicable schedules, notifications and statutory exceptions.