What is the custom tax in Pakistan?

custom tax in pakistan

The custom tax in Pakistan is defined as an indirect tax levied on import and export of goods is known as customs duty tax, also classified as import duty and export duty respectively.
Before registering and performing the various customs procedures, it is recommended that individuals familiarize themselves with all the basic concepts related to these procedures. A basic understanding of these concepts will not only ensure that things are done smoothly but also in a consistent manner.

Recommended: Property Tax in Pakistan 2019-20

Pakistan Custom Functions:

Custom tax in Pakistan is entrusted with guaranteeing that the following tasks are done in a lawfully endorsed way:

  • Trade Regulator

  • Trade Facilitation

  • Import & Export of legitimate cargo

  • Revenue Collection

  • Preventive (Control of contraband Goods)

TERMINOLOGies and definitions

“Account” signifies all books, records, correspondence, bank and other budget summaries.

“Act” means the Customs Act, the Act number IV of 1969 which is agreed on 3rd March 1969.

Decision authority:
Any authority which is eligible to pass an order under the Customs Act, 1969.

Appropriate officer:
An officer whose specific duties have been assigned under the Customs Act, 1969.

“Collector”, “Additional Collector”, “Deputy Collector” and “Assistant Collector “meant a person who collects customs and is designated under Section 3 of the Act to an area of ​​its jurisdiction.

Customs airport /Customs port:
Any airport or port designated by the Board as a customs airport or board for clearance of imported goods in Pakistan.

“Duties” means customs duties under the first schedule of the Customs Act, 1969.

An importer is a person who imports goods and is responsible for completing the necessary legal import customs clearance procedures and formal commitments upon arrival of the goods in the country.

Pakistan Customs Computerized System(PACCS):
The PACC is a coordinated framework that covers all exercises and procedures identified with customs as defined in clause (IA) of section 2 of the Customs Act, 1969 (IV of 1969).

Vehicle signifies an engine vehicle, motorcycle, van, microbus, transport, jeep, truck, and tractor with trailer or semi-trailer, etc.

Pakistan Customs is one of the elite cadres of Pakistan’s civil services. It is serving as Pakistan’s border guard against the movement of illicit goods and encourages substandard trade. It gave a significant wellspring of income to the Government of Pakistan as assessments. It also helps protect the domestic industry and boost trade.

Also for your reference, please check out the following documents for more information:
1. Pakistan Customs Tarif 2019-20
2. Fifth Schedule to the Customs Act, 1969 (2019-20)


Other Benefits

if you file the return or become a filer then the Tax deducted by Banks will be lesser otherwise it will mount up.

  • Income on dividend/payment of dividend:
    • Filer – 12.5%, Non-filer – 20%
  • Income:
    • Filer – 10% to 15%, Non-filer – 17.5%
  • Profit on National Savings Scheme or Post Office Savings:
    • Filer – 10%, Non-filer – 17.5% (Over Rs. 5 lacs)
  • Profit on debt paid by banking company:
    • Filer – 10%, Non-filer – 17.5% (Over Rs. 5 lacs)
  • Profit on bonds , certificates, debentures, securities:
    • Filer – 10%, Non-filer – 17.5% (Over Rs. 5 lacs)
  • On extraction of minerals from mines:
    • Filer – 0%; Non-filer – 5%
  • On brokerage or commission, Advertising agents:
    • Filer – 10%, Non-filer 15%
  • Life Insurance Agents (Commission under Rs. 5 lacs):
    • Filer – 8%, Non-filer 16%
  • People not covered in the above two points:
    • Filer – 12%, Non-filer 15%

Salaried Persons Tax Benefits

Most taxpayers do not know about the benefits of becoming a working taxpayer or filer, so they do not file income tax returns due to lack of information. However, they are now paying income tax deducted from their salaries. Taxes for leaders are deducted from the source by their employers. But they still look like a non-filer, if they do not file income tax returns or their name does not appear on the ATL list, it keeps them out of file and even with tax deducted from their employers and they end up either overpaying or high tax eventually. Paid individuals can enjoy many benefits simply by file as they pay their taxes. It is compulsory for all paid people to fill out their tax returns and file, whether they are public servants or private. The biggest loss associated with not filing tax returns is that you lose your refund claim, as taxes are deducted from the purchase.

Save on Imports & Export

For import of raw material, a tax of 5.5% for filers while 8% for non-filers is included. It means that he has imported Pakistani rupees of 20,00,000, the file will pay Rs. 110,000 on the other hand a non-filer would have to pay Rs. $ 160,000 as tax. Importers will have to pay an 8% tax around Rs 160,000 on import of Rs 2 million worth of raw materials and filers pay only 5.5% Rs 110,000 on the same amount as the amount of raw material purchased by the non-filers. Exports will be required to pay 9% of the total amount of Rs180,000 in sales of goods worth $ 2 million in exports. Retail sales tax revenue for consumers is 6% and 9% for non-filers. However, the firms pay only 6% of the work, Rs2,000,000 in exports worth Rs 2 million in their exports. In addition, non-filers will pay 20% more tax on their company profits compared to the 15% tax paid by the file owner. ​

Save on Government Tenders

Taxpayers 10% of the sales tax is owned by government and other companies and non-taxpayers pay 15% on the sale of state-owned goods or other companies. On the basis of contracts, those who do not file pay a 15 percent tax while 7.5% are paid by the filers and pay a 15% tax on the mortgage bond awards and the non-filers pay a 25% tax on the same amount. Preferences in Govt. tenders and saving in taxes. For filers the tax is 7.5 and 15 percent tax for the persons who are non-filers. On auctions tax ratio for both will be: filers – 10 %, for Non-filers – 15 %

Profit from Banking

Non-filers pay 15% tax on banknotes and savings program and 10% on filers, filers pay 4.5% of the assets on public and private companies as compared to filers, who see files pay 9% tax . Filers do not pay tax on bankruptcy (bankruptcy check, payment order, and draft) while non-filers have to pay Rs 600 as tax on each bank transaction. On the basis of contracts, those who file do not pay 15% on the other hand and file 7.5% and filers pay 15% on bond bond awards and non-filers pay a 25% tax on the same amount. Similarly, the filers pay 12% tax on the commission amount and the taxpayers or non-filers pay 15% tax on the same. When all this tax is applied

On withdrawals of over Rs. 50,000On Payment Order, Demand Draft or similar tool reaches more than 25,000On Online Money Transfer by 25,000On addition to tax on the sale of the required amount, payment order etc. All banking activities.

Low Token Tax on Vehicle

The token tax for persons who are filers lies between Rs 800 and Rs 10,000. While token tax for the persons who are  non-filers is doubled between Rs 1200 and Rs 30,000.

Vehicles TypesVehicles CategoriesEngine Capacity/SeatsAmount (in Rs.)
Two/Three Wheeler Vehicles Motorcycle/ScooterUpto 200 cc1,000 (Lifetime)
Motorcycle/Scooter 201 cc to 400 cc 2,000 (Lifetime)
Motorcycle/Scooter401 cc and Above 5,000 (Lifetime)
Four Wheeler Vehicles
Private / Government Upto 1000 cc 10,000 (Lifetime)
Private / Government From 1001 cc to 1300 cc1,500
Private / Government From 1301 cc to 1500 cc4,000
Private / Government From 1501 cc to 2000 cc5,000
Private / Government From 2001 cc to 2500 cc8,000
Private / Government From 2501 and Above12,000
Commercial VehiclesMottor Cab Having Upto 6 SeatsUpto 1000 cc600
Mottor Cab Having Upto 6 SeatsFrom 1001 cc and Above1,000
Public Service VehiclesFrom 8 Seats to 12 Seats200 Per Seat
Public Service VehiclesFrom 13 Seats to 14 Seats250 Per Seat
Public Service VehiclesFrom 15 Seats to 16 Seats300 Per Seat
Public Service VehiclesFrom 17 Seats to 41 Seats300 Per Seat
Public Service VehiclesFrom 42 Seats to 51 Seats400 Per Seat
Public Service VehiclesFrom 52 and Above500 Per Seat
Loading Vehicles / Goods VehiclesLaden weight not exceeding 1250 kg 500
Loading Vehicles / Goods Vehicles Laden weight exceeding 1250 kg but not exceeding 2030 kg 800
Loading Vehicles / Goods Vehicles Laden weight exceeding 2030 kg but not exceeding 4060 kg 2,000
Loading Vehicles / Goods Vehicles Laden weight exceeding 4060 kg but not exceeding 6090 kg 3,000
Loading Vehicles / Goods Vehicles Laden weight exceeding 6090 kg but not exceeding 8120 kg 3,500
Loading Vehicles / Goods Vehicles Laden weight exceeding 8120 kg 4,000

Low Income Tax on Vehicles

Activities related to car sale, purchase, registration or transfer all includes tax avoidance depending on the status of person if he is filer or non-filer. The filer will save on a car tax rate as compared to non-files.

Sr. #Vehicles CategoriesEngine Capacity/SeatsFilerNon-Filer
1PrivateFrom 851 cc to 1000 ccRs 10,000Rs 20,000
2PrivateFrom 1001 cc to 1199 ccRs 1,500Rs 3,000
3PrivateFrom 1200 cc to 1299 ccRs 1,750Rs 3,500
4PrivateFrom 1300 cc to 1499 ccRs 2,500Rs 5,000
5PrivateFrom 1500 cc to 1599 ccRs 3,750Rs 7,000
6PrivateFrom 1600 to 1999 ccRs 4,500Rs 9,000
7PrivateFrom 2000 and AboveRs 10,000Rs 20,000
8CommercialLoading Pickup/Mini Truck/TruckRs 2.50 per KgRs 5.00 per Kg
9CommercialPassenger Vehicle (Upto 9 Seats)Rs 50 per SeatRs 100 per Seat
10CommercialPassenger Vehicle (10 to 19 Seater)Rs 100 per SeatRs 200 per Seat
11CommercialPassenger Vehicle (20 & More Seater)Rs 300 per SeatRs 600 per Seat

Low Tax on Prize bond Win

Government by the Revenue Bill, 2020 proposed stronger mechanisms for non-filers to expand the tax base and generate more revenue and files remain intact. In this regard, the tax withholding rate on the prize bond or cross puzzle has been suggested to be increased to 30 percent from 25 percent for non-filers. However, the withholding tax rate for the file has not changed by 15 percent. The huge gap in holding tax rates clearly shows the intention and thinking of the government is that they try to boost the cost of the non-filers transactions and force them to declare their income and assets. Similarly, the fiscal bill also suggested improvements and changes in the withholding tax rates to 17.5% from the current 15% in revenue received by the company from non-fileable immovable property.

Save on Withholding Tax

There are major advantages of being a tax file and the disadvantages of non-filers, after completing income tax returns, the file name will be registered on the applicable taxpayers list (ATL). Similarly, if tax files have the potential to withhold tax, the file will have to pay only half the reserved tax as compared to non-filers. In any transaction conducted by the bank you will be able to maintain the WHT compared to non-filers. Withdrawal (Over $ 50,000): Filer – 0,3%, Non-File – 0,6% Rs. 300 per lac for files and Rs. 600 per lac for non-filers. No taxes are filed on bank transactions (Cross check, pay order, seek draft etc.).

If you own a business and you are a Filer then the withholding taxes will be reduced on your invoices compared to the non-file business. When any business person makes a payment, the following tax difference applies to file and non-file users:

Provided by distributors:
Filer – 3%, Non-filer 3.5% Exports:
Filer – 4%, Non-filer – 6% For Sale Of Other Goods (Exclusive):
Filer – 4.5%, Non-filer – 6.5% Electronic Payment or Print Ad Media:
Filer – 1.5%, Non-filer – 12 to 15% For Travel Operations (Company):
Filer – 8%, Non-filer – 12% For Travel Services (Outside Company):
Filer – 10%, Do Not File – 15% Implementation of Any Other Contract (Company):
Filer – 7%, Non-filer – 10% Execution of Other Contract (Outside Company):
Filer – 7.5%, Non-filer – 10.5% In selling petrol products at the gas pump:
Filer – 12%, Non-filer – 15% a