Islamabad, 15 May, 2025: Prime Minister Shehbaz Sharif has approved a reduction of Rs. 120 billion in import taxes for the upcoming fiscal year’s budget, though the automobile industry will not get any benefit from this relief.
This adjustment is to simplify the customs framework and make the local market more accessible to global competition over the next five years.
The decision comes forward despite concerns raised by both the commerce and industries ministries.
As part of this reform, the government will reduce the number of customs duty taxes from five to four: 0 percent, 5 percent, 10 percent, and 15 percent.
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The 3% slab, which applies to 972 product categories, will be eliminated. The existing 11% rate (covering 1,121 goods) will be cut to 10%, while the 16% rate (applying to 545 products) will drop to 15%.
The highest 20% tier (covering 2,227 items) is expected to be gradually removed.
Additional customs charges will be lifted over a four-year period, and regulatory duties are planned to be removed within five years. However, no changes will apply on imported vehicles.
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The Ministry of Finance and the Federal Board of Revenue have backed this initiative. In contrast, the commerce ministry cautioned that slashing import taxes in FY26 Budget may run counter to existing tariff policies and could fail to bring down manufacturing costs due to rising energy and raw material prices.
The Prime Minister also dismissed a proposal to introduce six duty slabs, favoring instead a more uniform structure to enhance the global competitiveness of Pakistani exports.
