Islamabad: Pakistan government has issued a wide-ranging amendment to the First Schedule of the Customs Act, 1969. The notification, published in the official Gazette, enacts sweeping changes to the Pakistan Customs Tariff (PCT) Codes, descriptions, and duty rates (CD%) for thousands of items spanning Chapters 1 to 99, with a pronounced focus on the automotive sector.
This extensive revision, part of the government’s broader fiscal strategy for 2026-27, signals a decisive shift towards supporting local manufacturing and rationalizing import duties. The changes introduce new tariff structures that are set to redefine the cost dynamics for a wide array of imported goods.
Automotive Sector at the Forefront
The most detailed amendments are concentrated in the automotive sector, revising duties on everything from raw materials to completely built-up units (CBUs). The notification meticulously updates duty rates for components used in the assembly and manufacture of vehicles, including specific components for motor cars, tractors, buses, trucks, and motorcycles.
Key changes in this sector include:
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Engine and Transmission Parts: Customs duties on components such as engine parts (PCT Codes 8409.9110 to 8409.9990) and transmissions (8708.4010) have been revised for various vehicle categories, including vehicles of Chapter 87 and agricultural tractors.
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Suspension and Braking Systems: Duty rates on a wide range of suspension components like shock absorbers, leaf springs, and U-bolts (PCT Codes 8708.8010 to 8708.9990), as well as braking system components (8708.3031 to 8708.3090), have been set at a new standard rate.
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Body Parts and Accessories: Tariffs on hundreds of body components, including door handles, bumpers, sun visors, and instrument panels (PCT Codes 8708.2930 to 8708.2990), have been explicitly defined, often set at a flat rate of 25%.
A New Duty Structure for Vehicle Imports
The tariff changes align with recent announcements under the amended Finance Bill 2026, significantly reducing customs duties on imported vehicles. Under the new duty structure:
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Petrol Vehicles: Customs Duty for cars up to 800cc has been slashed to 30%, while the rate for vehicles in the 1801-2000cc range has been halved to 50%.
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Hybrid Vehicles: A major relief comes for small hybrid vehicles, with the CD on all imported hybrids being reduced from 100% to 50%.
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Electric Vehicles (EVs): The duty structure for EVs has been rationalized, with Customs Duty for EVs valued up to $75,000 remaining at 25%. However, a new FED has been introduced on luxury EVs above $75,000.
Broader Industrial Support
Beyond vehicles, the government has slashed duties on more than 7,500 items used as industrial raw materials, machinery, and components. Duties on 92 tariff lines have been reduced from 20% to 15%, and additional customs duty on 449 lines has been decreased from 6% to 4%.
Raw materials used in cancer treatment have been fully exempted, and duties on agricultural machinery and special construction vehicles have also been abolished. This broad-based tariff reduction aims to reduce production costs and stimulate industrial growth.
Effective Date
These amendments will come into force with the new fiscal year on July 1, 2026. The comprehensive changes reflect the government’s commitment to implementing a phased reduction in customs duties, as envisioned under the National Tariff Policy, to make Pakistan’s economy more competitive and consumer-friendly.