How to Calculate Import Customs Duty in Pakistan?
Step by Step guide to calculate Customs Duty
19 March, 2020 by
How to Calculate Import Customs Duty in Pakistan?
Munawar Ahmed


Calculation of Import Customs Duty helps in calculating the total cost of goods when you import them to Pakistan. This can be used in financial feasibilities, budgetary requirements or supply chain finance.

This is particularly important for traders and manufacturers who want to import various goods, to be used for various purposes.

In this post, we will be learning how different duties are levied on imported goods, and then also see how they are calculated. We will also provide you with resources that will help you calculate the duties of any product. Last but not the least, we will also ensure to keep this blog updated to ensure that you are calculating the exact amount of duties every time.

What is Customs Duty, and Why Does it Matter?

Customs duty is a type of duty that is paid to the Government when any good or service is imported from outside the country. In Pakistan, this is usually paid at the time of Customs Clearance.

In Pakistan, when we say that we want to calculate Customs Duty, it means that we want to know all duties and taxes to be levied on your imported good. Also known as good's duty structure.

When importing goods, an importer must be aware of the duty structure to decide whether it is feasible for him to import the goods or not. 

In most cases, a Duty Structure involves the following duties and taxes:

  • Customs Duty
  • Additional Customs Duty
  • Regulatory Duty
  • Sales Tax
  • Additional Sales Tax
  • Withholding Income Tax
  • Excise Duty & Taxation / CESS

Customs Duty

This is a basic duty that is levied on imported goods.

Additional Customs Duty

The Federal Government of Pakistan can also impose additional customs duty on imported goods.

Regulatory Duty

This duty is applied only on specific goods that are produced in Pakistan but still being imported from another country.

Sales Tax

A tax paid to FBR (Federal Board of Revenue) for the import of goods. Usually, FBR allows the importer to collect the amount of sales tax from the consumer at the point of purchase.

Additional Sales Tax

Similar to Sales Tax, there is an additional sales tax levied on imported goods.

Withholding Income Tax

This is also known as Advance Income Tax collected by FBR in Advance and is adjustable from your final income tax liability.

Excise Duty & Taxation / CESS

As per the Sindh Finance Act, 2019, CESS tax is also collected for imported goods. Compared to above taxes, this tax is calculated on basis of the weight.

How to calculate Customs Duty, a step by step guide?

Step 1: Know your Product!

To calculate Customs Duty on any good you are required to know the following:

  • CFR Price of your imported goods.
  • The sea freight cost (in case, the price of your imported goods is for ​FOB​)
  • Good's HS Code.
  • Marine Insurance Charges (optional)

Let’s take an example of importing Hats:

CFR Price: 100,000 USD
Weight: 20,000 KGs
Item HS Code: 6505.0000

Step 2: Know your Duty Structure!

Before we begin the calculation, we need to know the Customs Duty Structure of Hats.
For this, please go to official Pakistan Customs Site, WeBOC, and enter your HS Code in the field and press enter.

WeBOC Duty Structure as per their HS Code

As per the picture above the duty structure, also known as Tariff Information, is:

Customs Duty

20%

Additional Customs Duty

7%

Regulatory Duty

10%

Sales Tax

17%

Additional Sales Tax *

3%

Income Tax 

12%

*Additional Sales Tax is not present in the above image, but as per Sales Tax Act of Pakistan, this is 3% for all items.

Now let us dive into the calculation of Customs Duty.

Step 3: Calculate your Declared Value to Customs!

First and foremost, you are required to calculate the declared value to Pakistan Customs.

To calculate this declared value you are required to add Marine Insurance Amount in USD to the price of your goods. If you do not have Marine Insurance Amount, as per Pakistan Customs, please consider 1% of your CNF Value as Marine Insurance Charges.

CNF Amount:

100,000 USD

Marine Insurance (1% of 100,000 USD)

1,000 USD

Total of CNF Amount And Marine Insurance

101,000 USD

After getting the total you are required to add Landing charges, which are 1% of the Total of CNF and Marine Insurance, as per Pakistan Customs.

Total of CNF Amount And Marine Insurance

101,000 USD

Landing Charges (1% of 101,000 USD)

1,010 USD

Declared Value to Customs

102,010 USD

Now you need to convert your declared value to customs from foreign currency to the local currency,

Step 4: Convert Declared Value to Customs in PKR!

This step is easy, you just need to get exchange rate from NBP Rate Sheet, and convert the foreign currency into Pakistani Rupee.

For simplicity sake, we will take following exchange rate:

1 USD = 100 PKR

Declared Value to Customs (102,010 USD x 100 PKR)

10,201,000 PKR

Now your Customs Duty will be calculated on Declared Value. Let’s start with that.

Step 5: Calculate your Duties!

To calculate Customs Duty, simply multiply the percentages of duties with Declared Value to Customs:

Declared Value to Customs = 10,201,000 PKR

A) Customs Duty (20% of 10,201,000 PKR)

2,040,200 PKR

B) Additional Customs Duty (7% of 10,201,000 PKR)

714,070 PKR

C) Regulatory Duty (10% of 10,201,000 PKR)

1,020,100 PKR

Total Duties (A + B + C)

3,774,370 PKR

Step 6: Calculate Sales Tax!

Now to calculate the sales tax and additional sales tax you are required to add Declared value to customs and Total Duties.

Declared Value to Customs + Total Duties =   10,201,000 + 3,774,370 = 13,975,370 PKR

A) Sales Tax (17% of 13,975,370 PKR)

2,375,813 PKR*

B) Additional Sales Tax (3% of 13,975,370 PKR)

419,261 PKR*

Total Sales Tax (A + B)

2,795,074 PKR

*Rounded to nearest whole number

Step 7: Calculate Withholding Income Tax!

Now to calculate the withholding tax you are required to sum Declared Value to Customs, Total duties and Total Sales Tax. And then calculate Withholding Tax on it.

Declared Value to Customs + Total Duties + Total Sales Tax = 10,201,000 +3,774,370 + 2,795,074 = 16,770,444 PKR

Withholding Income Tax (12% of 16,770,444 PKR)

2,012,453 PKR*

*Rounded to nearest whole number

Step 8: Calculate the Excise Duty

Excise Duty is calculated on Declared Value to Customs, and its percentage is decided through following schedule:

NET WEIGHT OF GOODS

RATE OF CESS ALONG WITH DISTANCE

Upto 1250 Kilograms

1.20 % of total value of goods as assessed by the Customs Authorities plus 1 Paisa.per. Kilometer

Exceeding 1250 Kilograms but not exceeding 2030 Kilograms

1.21.% of total value of goods as assessed by the Customs Authorities plus 1 Paisa per Kilometer

Exceeding 2030 Kilograms but not exceeding 4060 Kilograms

1.22 % of total value of goods as assessed by the Customs Authorities plus 1 Paisa per Kilometer

Exceeding 4060 Kilograms but not exceeding 8120 Kilograms

1.23 % of total value of goods as assessed by the Customs Authorities plus 1 Paisa per Kilometer

Exceeding 8120 Kilograms but not exceeding 16000 Kilograms

1.24 % of total value of goods as assessed by the Customs Authorities plus 1 Paisa per Kilometer

Exceeding 16000 Kilograms

1.25 % of total value of goods as assessed by the Customs Authorities plus 1 Paisa per Kilometer

As our Hats are in total 20,000 KGs, we will take 1.25%. Following is the calculation of Excise Duty.

A) CESS (1.25% of 10,201,000 PKR) 

127,513 PKR*

B) Stamp Paper (Default)

1,000 PKR

C) Transportation 

3 PKR

Total Excise Duty (A +B + C)

128,516 PKR

Step 9: Calculation of Total Duties and Taxes payable!

The following table shows the total duties and taxes that are to be paid to FBR in order to release your shipment from Customs of Pakistan:

Total Duties

3,774,370 PKR

Total Sales Tax

2,795,074 PKR

Withholding Income Tax

2,012,453 PKR

A) Total Payable to Collector of Customs

8,581,897 PKR

B) Total Payable to Excise Duty

128,516 PKR

Total Customs Duty & Excise Duty (A + B)

8,710,413 PKR

So to summarize you bought the goods for

CFR Price: 100,000 USD * 100 PKR = 10,000,000 PKR

And you paid Customs Duty of 

Total Customs Duty & Excise Duty = 8,710,413 PKR

So your total price for bringing the goods to Pakistan would be:

CFR Price + Total Customs Duty & Excise Duty = 18,710,413 PKR

Exemptions on Customs Duties and Taxes

Do remember that the above calculation does not include various exemptions that Government of Pakistan provides. These exemptions are given in Statutory regulatory orders (SRO). You can find all such exemption on WeBOC, by entering the HS Code and viewing Exemptions / SRO sections as displayed in the following picture:

WeBOC Exemptions / SROs section

So for example, in the case of our hats import, if you were importing hats from China, due to SRO 1640(I)/2019-3991, instead of paying Customs Duty of 20% you will be paying 5% Customs Duty.

You can further know about more SROs from the FBR Official Website.

Summary

Long story short, if you do not want to go in the hassle of calculation of customs duty & taxation, just contact us. We will provide you with exact customs duty and excise calculation.

How to Calculate Import Customs Duty in Pakistan?
Munawar Ahmed
19 March, 2020
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