Additional Custom Duty in Pakistan 2025: Complete Guide to Rates, Applicability & Exemptions

Additional Custom Duty (ACD) continues to influence how Pakistan regulates its imports. In the fiscal year 2025–26, significant reforms have been introduced to ease import costs, support local industries, and simplify the tax system. This guide explains what ACD is, how rates have changed, which sectors are exempt, and what future policies may look like.

What Is Additional Custom Duty?

ACD refers to a surcharge levied in addition to the regular customs duty. It was introduced under Section 18(3) of the Customs Act, 1969. The primary goal is to protect domestic production and discourage unnecessary imports.

How ACD Applied in 2024–25

During 2024–25, ACD was charged based on the applicable tariff slab. The duty rates were as follows:

Tariff Slab	ACD Rate
0% to 10%	2%
11% to 15%	4%
16% to 20%	6%
Above 20%	7%

For instance, essential imports such as seeds, electric vehicles, and industrial equipment were exempt from ACD to encourage development in key areas.

What Changed in the 2025–26 Budget?

In Budget 2025–26, the government introduced key reforms to reduce the ACD burden and boost economic activity. Here’s how the rates have shifted:

Previous ACD Rate	New ACD Rate	Coverage
2%	0%	Over 4,300 items (except 95 lines)
4%	2%	Goods under the 15% customs duty slab
6%	4%	Goods under the 20% slab
7%	6%	Items above the 20% slab

These changes aim to create a fairer and more transparent system that reduces costs for businesses.

Items Now Exempt from ACD in 2025

Several essential categories continue to enjoy exemptions, making them more affordable for importers:

Seeds and spores used in agriculture
Plant and machinery under Chapters 84 and 85
Electric vehicles, including 2- and 3-wheelers
Vehicles in CKD/CBU form under 850cc
Imports under the D-8 Preferential Trade Agreement
Petroleum products like LNG and motor spirit
Polymers used in manufacturing

By removing ACD on these items, the government supports sectors that drive productivity and employment.

ACD on Used Car Imports – What to Expect

From September 2025, the import of used vehicles up to 5 years old will become legal. However, the government will apply a 40% ACD on these imports. Here’s what to expect:

The rate will drop by 10% every year, starting from FY 2026–27
Vehicles brought under the baggage scheme may still qualify for exemptions, depending on stay duration abroad

As a result, the policy will balance foreign car availability with protection for the local auto industry.

Long-Term Vision: Elimination of ACD

The government has outlined a five-year tariff reform plan to improve Pakistan’s trade competitiveness. This includes:

Phasing out ACD and Regulatory Duties completely
Introducing a uniform customs duty slab capped at 15%
Removing sector-based exemptions under the Fifth Schedule
Promoting export-driven industrial growth

This strategy aims to simplify compliance, attract investment, and build a stronger economy.

Quick Summary Table: ACD Structure in 2025–26

Category	ACD Status
Items under 10% tariff	0%
Items under 15% tariff	2%
Items under 20% tariff	4%
Items above 20% tariff	6%
Exempted Items	Seeds, EVs, Machinery, D-8 imports
Used Car Imports (Sept 2025)	40% (then decreases yearly)

Final Thoughts

In summary, the restructured Additional Custom Duty in Pakistan 2025 reflects the country’s ongoing effort to create a balanced, business-friendly trade environment. By lowering rates, increasing transparency, and offering strategic exemptions, the government has taken a significant step toward economic modernization. Businesses, especially importers and manufacturers, should take advantage of these changes by reviewing the updated SROs and aligning their planning with the revised duty framework. Stay tuned with Bloom Pakistan