Islamabad, June 10, 2025 – The Federal Board of Revenue (FBR) has unveiled the salient features of the Finance Bill 2025, focusing extensively on reforms and amendments in the Customs sector under the Customs Act, 1969.
The newly introduced measures aim to support export-led growth, ensure consumer welfare, enhance industrial competitiveness, and improve transparency and efficiency in Customs administration.
Guiding Objectives of Customs Reforms
The Finance Bill 2025 outlines several key objectives driving the changes to Customs policy. These include promoting economic sovereignty, fostering employment opportunities, enhancing productivity through innovation, and aligning the Customs framework with the broader FBR Transformation Plan. The reforms are also designed to simplify trade procedures, reduce unnecessary litigation, and combat smuggling through technological enhancements.
Tariff Rationalization and Duty Reductions
A significant portion of the Finance Bill addresses tariff rationalization:
• New tariff slabs of 5%, 10%, and 15% have been introduced.
• Outdated slabs of 3%, 11%, and 16% have been abolished to streamline the duty structure.
• The 0% tariff rate, previously applicable to 2,201 items, has been extended to an additional 916 PCT codes.
• Customs Duties (CD) have been reduced on 2,624 PCT codes to facilitate the availability of cheaper raw materials for local industries.
In terms of Additional Customs Duty (ACD):
• ACD has been cut from 2% to 0% on over 4,300 tariff lines under 0%, 5%, and 10% slabs.
• For items under the 15% slab, ACD has been reduced from 4% to 2%.
• ACD on items under the 20% slab has dropped from 6% to 4%.
• For high-tariff items above 20%, ACD has been trimmed from 7% to 6%.
Regulatory Duties and Exemptions Overhauled
The Finance Bill 2025 significantly amends the Regulatory Duty (RD) regime:
• RD on 554 PCT codes has been removed.
• RD rates have been slashed on 595 codes, with the maximum rate brought down from 90% to 50%.
To rationalize the exemption structure, 479 entries across various parts of the Fifth Schedule have been eliminated, aiming to reduce the fiscal burden and prevent abuse of exemption privileges.
Legislative and Technological Advancements in Customs
The Finance Bill introduces major legislative changes:
• Creation of Centralized Assessment Units (CAUs) and Centralized Examination Units (CEUs) to promote standardized evaluations.
• Deployment of Digital Enforcement Units (DEUs) at critical trade points to curb smuggling through real-time digital surveillance.
• A Cargo Tracking System (CTS) has been rolled out for improved monitoring of transit cargo, helping distinguish between legitimate trade and illicit activity.
• Filing of Goods Declarations will now be permitted without advance duty payment, encouraging pre-arrival clearance.
To reduce port congestion, a penalty has been introduced for unclaimed cargo exceeding the allowed dwell time. Litigation thresholds have been revised, raising the contravention initiation limit from Rs20,000 to Rs100,000.
The Finance Bill 2025 also merges the Directorate General of Intelligence and Investigation, Customs, with the Risk Management System (RMS) for better data utilization and strategic enforcement. New directorates for Customs Auctions and Public Relations will improve auction processes and stakeholder engagement.
Other notable features include:
• Reduction of de-minimis limit to Rs500 for courier parcels to combat misuse.
• Restrictions on scrapping and mutilation to 10% of bona fide cargo.
• Legal presumption of smuggling for vehicles with tampered chassis, regardless of registration.
The reforms under the Finance Bill 2025 mark a bold step toward modernizing Customs practices in Pakistan. With these comprehensive features, the government aims to build a fair, efficient, and growth-friendly trade environment that supports fiscal consolidation and economic resilience.