Government plans to reduce customs duty rates on 92 tariff lines, introduce new PCT codes, and facilitate industrial growth through lower import costs.
The federal government has proposed a significant reduction in customs duty rates on imported raw materials and industrial input goods as part of the Pakistan Budget 2026-27.
The proposal, introduced through the Finance Bill 2026, aims to lower production costs, improve industrial competitiveness, and support manufacturing sectors that rely heavily on imported inputs.
According to the budget document, the proposed changes cover 92 tariff lines across various chapters of the Pakistan Customs Tariff (PCT).
The government believes that reducing import duties on essential raw materials will help local industries expand production, enhance exports, and improve overall economic activity.
Under the proposed customs duty structure, products currently subject to a 20 percent customs duty will see the rate reduced to either 15 percent or 10 percent, depending on the category of goods.
Similarly, goods presently taxed at 15 percent customs duty are proposed to be brought down to 10 percent.
The Finance Bill further proposes reducing customs duty from 10 percent to 5 percent on selected raw materials and industrial inputs.
In addition, products currently facing a 5 percent customs duty are proposed to become fully exempt, with the duty rate reduced to zero percent. These reductions are expected to provide cost relief to manufacturers and importers across multiple industrial sectors.
The government stated that the tariff rationalization measures are designed to encourage industrial investment and improve the availability of raw materials for domestic production.
By lowering import costs, authorities expect businesses to benefit from reduced input expenses, potentially leading to more competitive pricing and increased output.
Besides the duty reductions, the Finance Bill 2026 also proposes several trade facilitation measures.
A total of 15 new Pakistan Customs Tariff (PCT) codes have been created to improve classification and statistical reporting.
Additionally, the descriptions of two existing PCT codes have been amended to ensure greater clarity and efficiency in customs administration.
The proposed customs reforms form part of the broader economic strategy outlined in the federal budget, which seeks to promote industrial development, simplify trade procedures, and strengthen Pakistan’s manufacturing sector through a more business-friendly tariff regime.
