The Federal Board of Revenue (FBR) has issued salient features explaining major changes in customs duty through the Finance Bill, 2026.
1. Guiding Principles:
• Strategic tariff rationalisation through the National Tariff Policy (NTP) 2025–30.
• Simplification, trade facilitation, and enhancement of system efficiency.
• Targeted public health relief and economic stimulus for key sectors.
2. Tariff Rationalisation (NTP 2025–30):
• Reduction of the existing Customs Duty (CD) from 20% to 15% and 10%; existing rates of 15% and 10% to 10% and 5%; and existing rates of 5% to 0%, respectively, for input goods across different industrial sectors on 92 tariff lines.
3. Reduction in Additional Customs Duty (ACD) Rates:
• Reduction of ACD from 6% to 4% on 449 tariff lines.
• Reduction of ACD from 4% to 2% on 2,107 tariff lines.
• Elimination of ACD from 2% to 0% on 569 tariff lines.
4. Review of the Regulatory Duty (RD) Regime:
• RD rates exceeding 20% have been reduced and capped at 20% for 359 tariff lines.
• A 20% reduction in all RD rates ranging from 2.5% to 20% across 1,347 tariff lines.
• RD rates of 2.5%, 2%, and 1% have been reduced by 20% or completely eliminated across 208 tariff lines.
5. Review of the Exemption Regime (Fifth Schedule):
• Deletion of entries from the Fifth Schedule where concessional CD equals or exceeds the First Schedule general tariff.
• Exemption from CD on critical cancer-related Active Pharmaceutical Ingredients (APIs) under the Fifth Schedule.
• Reduction of Customs Duty from 20% to 10% on specialised construction-related vehicles for the construction sector.
• Exemption from CD on defence imports.
6. Exemption from CD, ACD, and RD on the import of agricultural machinery.
7. Exemption from CD on the import of bulletproof vehicles for the Shanghai Cooperation Organisation Summit and for bulletproof vehicles imported by the Federal or Provincial Governments for the ongoing war against terrorism.
8. Fifteen new PCT codes have been created, and the descriptions of two PCT codes have been amended for trade facilitation and statistical purposes.
9. State warehouses authorised by the Collector of Customs have been defined to provide legal clarity regarding the types of warehouses covered.
10. To address a legal lacuna, it has been clarified that the exemption threshold for framing a misdeclaration case shall apply irrespective of the number of Goods Declarations involved and shall be determined solely by the amount of revenue involved, through the removal of the words “in a case”.
11. The scanning of cargo has been provided with legal cover to facilitate the non-intrusive process of scanning under the Act.
12. The FBR has been authorised to rationalise penalties, prescribe an appeals mechanism, and exempt specified classes of goods or Customs stations from such penalties through rules relating to delayed GD filing or clearance of goods at ports. Collectors have also been authorised to reduce such penalties.
13. The FBR may authorise any person, as defined under the Customs Act, to conduct auctions of auctionable goods in the prescribed manner, thereby improving efficiency and transparency.
14. The maximum penalty on terminal operators for failing to honour Delay Detention Certificates issued by Customs has been increased from Rs. 500,000 to Rs. 10 million.
15. A new penal clause has been introduced to prescribe specific penalties for the unauthorised removal and misappropriation of goods from Customs state warehouses.
16. An explanation has been introduced to provide legal clarity regarding the term “removal”, which shall include carrying, transporting, depositing, harbouring, keeping, concealing, retailing, or any other act facilitating the movement or possession of smuggled goods.
17. Any authority is now required to hand over seized goods liable to confiscation to the Customs authorities for proceedings under the Customs Act, irrespective of any pending proceedings under any other law currently in force, with corresponding amendments to the relevant penal clause.
18. Faceless adjudication has been introduced to avoid face-to-face interaction between adjudicating officers and respondents through virtual proceedings, thereby enhancing transparency, efficiency, and the swift disposal of cases.
19. Special Judges are being empowered to freeze the assets of accused persons involved in the illegal transfer of funds into or out of Pakistan to prevent the dissipation of assets during trial.
20. Independent Case Scrutiny Committees are being introduced to examine and decide matters relating to the filing of appeals before courts, with the aim of avoiding frivolous litigation.
21. A provision has been introduced allowing the service of summons through newspaper publication where the accused person cannot be traced.
