Importers bringing goods into Pakistan must understand Section 148 of the Income Tax Ordinance, 2001, which governs advance income tax at the import stage. This tax is collected by Customs at the time of clearance and can significantly affect cash flow and compliance for importers.
Below is an interactive, SEO-optimized explainer to help importers stay compliant and avoid surprises.
📦 What Is Section 148?
Section 148 requires the Collector of Customs to collect advance income tax from every importer on the value of imported goods, at rates specified in Part II of the First Schedule, for goods listed in Parts I–III of the Twelfth Schedule.
📌 The Federal Board of Revenue (FBR) can amend the Twelfth Schedule through official notifications.
🧾 When Is Advance Tax Collected?
Under Section 148(5):
• Advance tax is collected at the same time as customs duty
• If goods are exempt from customs duty, tax is collected when duty would have been payable
Customs laws under the Customs Act, 1969 apply to this collection process.
🏭 Raw Materials vs Finished Goods
• Goods listed in Part III of the Twelfth Schedule may be used as raw materials or finished goods
• FBR may allow such goods to be treated as Part II goods if imported as raw material for own use, subject to prescribed conditions
This distinction can affect the tax rate and treatment.
💻 Digital Presence Exception
Under the latest amendment:
• No advance tax under Section 148 is collected if the recipient is liable under the Digital Presence Proceeds Tax Act, 2025
• This applies where tax has already been collected by a payment intermediary under Section 153
📉 Minimum Tax vs Adjustable Tax
Minimum Tax Applies:
• Generally, tax collected under Section 148 is treated as minimum tax
• It is not adjustable against final tax liability in most cases
Exceptions:
• Imports made by an industrial undertaking for its own use
• Certain goods are always subject to minimum tax, including:
o Edible oil
o Packaging material
o Paper and paperboard
o Plastics
📌 FBR may revise this list through notification.
💰 How Is “Value of Goods” Calculated?
Section 148 defines value as:
1. Retail-price goods (Third Schedule, Sales Tax Act)
→ Retail price + sales tax
2. Other goods
→ Customs value + customs duty + FED + sales tax
3. Minimum value (if notified by FBR)
→ Minimum notified value + applicable duties and taxes
⚠ Key Compliance Tips for Importers
✔ Check whether your goods fall under the Twelfth Schedule
✔ Confirm whether tax is minimum or adjustable
✔ Keep documentation of customs value and tax paid
✔ Monitor FBR notifications for rate and valuation changes
✔ Factor advance tax into pricing and cash-flow planning
🔎 Why Section 148 Matters
Failure to account for advance tax at import stage can:
• Increase cost of imports
• Cause customs clearance delays
• Lead to tax disputes and recovery proceedings
Understanding Section 148 helps importers plan better and remain fully compliant with FBR requirements.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Importers should consult a qualified tax or customs professional for guidance specific to their transactions.