Most first-time importers are surprised at how far the final bill sits above the sticker price of their goods. That is because "customs duty" is shorthand for a stack of separate charges, each calculated on a slightly different base. Getting the sequence right is the difference between an accurate landed cost and a nasty shock at the port. This guide breaks the calculation down step by step under the Customs Act 1969 and the Income Tax Ordinance 2001, with a worked example you can copy for your own consignment.
The layers of import tax
Every commercial import into Pakistan can attract up to five separate levies, collected together by Pakistan Customs when the goods clear. Here is what each one is and where it sits in the calculation:
| Levy | What it is | Charged on |
|---|---|---|
| Customs Duty (CD) | Standard tariff for the goods' PCT code, set in the First Schedule to the Customs Act 1969 | Customs value |
| Additional Customs Duty (ACD) | A small across-the-board duty layered on most tariff slabs | Customs value |
| Regulatory Duty (RD) | Protective duty on selected items, imposed and revised by SRO | Customs value |
| Sales Tax | Standard 18% GST at the import stage | Duty-paid value |
| Income Tax (Sec 148) | Advance income tax collected at import | Value + duties + sales tax |
Some goods also attract Federal Excise Duty (FED) - for example certain vehicles and beverages - which slots in alongside the customs duties before sales tax is applied.
Customs duty slabs and the PCT code
Every product has an 8-digit Pakistan Customs Tariff (PCT) code, the local version of the international HS code. That code fixes your customs duty rate. Under the current tariff, most goods fall into one of these standard slabs:
| Customs duty slab | Typical goods |
|---|---|
| 0% | Many raw materials, essential inputs, life-saving items |
| 5% - 10% | Intermediate goods and semi-finished inputs |
| 15% | A wide range of general goods |
| 20% and above | Finished consumer goods and protected categories |
On top of the slab, additional customs duty applies at a low rate that steps up with the slab - broadly around 2% on lower slabs, rising to roughly 4% to 6% on the higher ones. The government has been phasing ACD and RD down under its National Tariff Policy, so rates move each budget. Because a single wrong digit in the PCT code can change your duty completely, confirming the code is the most important step in the whole process.
The customs value is your CIF value (cost, insurance and freight) converted into rupees at the State Bank of Pakistan exchange rate for the day the Goods Declaration is filed - not the day you paid your supplier.
How to calculate import duty, step by step
The layers are calculated in a fixed order, because each new charge sits on the running total. Take an imaginable consignment with a CIF value of PKR 1,000,000, a 20% customs duty slab, 4% ACD, no regulatory duty, standard 18% sales tax and 6% income tax at import:
| Step | Calculation | Amount (PKR) |
|---|---|---|
| Customs value (CIF in PKR) | Base | 1,000,000 |
| Customs duty (20%) | 20% of 1,000,000 | 200,000 |
| Additional customs duty (4%) | 4% of 1,000,000 | 40,000 |
| Duty-paid value | 1,000,000 + 200,000 + 40,000 | 1,240,000 |
| Sales tax (18%) | 18% of 1,240,000 | 223,200 |
| Income tax base | 1,240,000 + 223,200 | 1,463,200 |
| Income tax (6%, Sec 148) | 6% of 1,463,200 | 87,792 |
| Total duties & taxes | 200,000 + 40,000 + 223,200 + 87,792 | 550,992 |
| Landed cost | 1,000,000 + 550,992 | 1,550,992 |
In this example the duties and taxes add roughly 55% to the CIF value. Change the slab, add a regulatory duty, or import as a non-filer and that percentage climbs quickly - which is exactly why the running order matters.
Sales tax and income tax at import
Two of the biggest layers are not customs duties at all. Sales tax is charged at the standard 18% under the Sales Tax Act 1990, and crucially it is applied to the duty-paid value, so you are effectively paying GST on the customs duty as well as on the goods. If you are a sales-tax-registered business, this import stage tax is usually claimable as input tax against your output tax - our sales tax registration and returns guide explains how to reclaim it.
Income tax is collected at the import stage under Section 148 of the Income Tax Ordinance 2001. It is an advance tax - adjustable against your final liability for the year - charged at rates that commonly range from about 1% for industrial raw materials up to around 5.5% to 6% for commercial importers, depending on the item's category in the First Schedule. Importers who are not on the Active Taxpayers List pay significantly higher rates under the higher-rate schedule, so filer status directly changes your cost of importing. See our filer vs non-filer guide for the wider gap, and the withholding tax rate card for the detail.
WeBOC, PSW and clearance
You do not calculate and pay these charges by hand at the port. Imports are cleared electronically through WeBOC and the wider Pakistan Single Window (PSW) platform. In outline the process runs:
- File the Goods Declaration (GD) - the importer or a licensed clearing agent lodges the declaration with the PCT code, value and documents.
- Assessment - the system applies the tariff, SROs and exemptions and computes duties and taxes; consignments may be routed to a customs officer for examination.
- Payment and release - once the assessed dues are paid, the goods are cleared for delivery.
The FBR and WeBOC provide an online duty calculator: enter the PCT code and it returns the current CD, ACD, RD, sales tax and income tax so you can budget before you order. Always sanity-check the code, because the calculator only ever reflects the code you feed it.
Exemptions, SROs and trade agreements
The headline slab is rarely the final word. Reliefs can cut your duty sharply, and they live in several places:
- The Fifth Schedule to the Customs Act 1969 grants concessionary or zero rates for defined goods, plant and machinery.
- SRO concessions reduce duty for specific sectors, inputs or projects - but they are conditional, so read the fine print.
- Free Trade Agreements - for example with China - can lower or remove customs duty where you hold a valid certificate of origin.
Getting these wrong is expensive in both directions: claim a concession you do not qualify for and you face recovery plus penalties; miss one you were entitled to and you overpay. If you are importing regularly, a short review of your classification and available reliefs usually pays for itself. Our tax planning and advisory team can help.
Frequently asked questions
How is customs duty calculated in Pakistan?
Find the 8-digit PCT code, apply the tariff rate to the customs (CIF) value, then add additional customs duty, any regulatory duty, 18% sales tax on the duty-paid value, and Section 148 income tax.
What is the sales tax rate on imports?
The standard rate is 18%, charged on the duty-paid value - the customs value plus all customs duties - not on the invoice price alone.
What is the difference between customs duty and regulatory duty?
Customs duty is the standard tariff in the First Schedule to the Customs Act 1969. Regulatory duty is an extra, protective duty imposed on selected items by SRO and revised often.
How much income tax is collected at import?
Under Section 148 it commonly ranges from about 1% to 6% of the duty-and-sales-tax-inclusive value depending on the goods, and non-filers pay more.
How do I find the duty on my product?
Identify the correct 8-digit PCT code, then check it against the Pakistan Customs Tariff or the FBR/WeBOC duty calculator - or ask us to confirm before you order.