Legal Advice on Excise and Customs


For more advice on the License Tax Act 1867, the Certificate Act 1868, Income Tax Ordinance 2001, Income Tax Rules 2002, Sales Tax Act 1951, Federal Excise Act 2005, Custom Act 1969 and any specific advice on the law of excise and custom duty in Pakistan contact [email protected]

Excise Duty: This is a type of tax, which is paid by the owner of motor vehicles and other transport machinery. The excise duty also includes transportation charges during usage of such motor vehicles.The Federal Excise Act, 2005, was promulgated with effect from 1st July 2005, repealing the Central Excises Act, 1944. Now the term “Federal Excise Duty” is used instead of the previous “Central Excise Duty” for the duties of excise levied under the 2005 Act. The system of physical supervision has been entirely done away with and now all clearances are self-assessed and no prior permission for clearance will be required. The payment of duty is on a monthly basis and the duty on all clearances during the month will be payable by the 15th of next month. This is in contrast to previous requirement of payment of duty prior to clearance. Double taxation has been eliminated by allowing adjustment of the excise duty paid on the input goods used directly in the manufacture of excisable goods. Examples of items on which excise duty is levied include motor vehicles, trucks, passage through toll plaza etc.

Custom Duty: In this type of tax, the amount is taken from the import or export items. Entities or people who import or export things from abroad, they have to pay this duty to the custom officers. Goods imported and exported from Pakistan are liable to rates of customs duties as prescribed in Pakistan Customs Tariff. Customs duties in the form of import duties and export duties constitute about 37% of the total tax receipts. The rate structure of customs duty is determined by a large number of socio-economic factors. However, the general scheme envisages higher rates on luxury items as well as on less essential goods. The import tariff has been given an industrial bias by keeping the duties on industrial plants and machinery and raw material lower than those on consumer goods. Pakistan Customs is the guardian of Pakistan borders against movement of contra band goods and is facilitator of bona fide trade. It provides a major source of revenue to the Government of Pakistan in the form of taxes levied on the goods traded across the borders. It also helps to protect the domestic industry, discourage consumptions of luxury goods and stimulate development in the under -developed areas. Custom duty is payable under The Custom Act 1969. Examples on items on which custom duty has to be paid includes imported cars, machineries etc.