Enhanced revenue collection, economic growth: FBR introduces substantial amendments to Customs Act, 1969

LAHORE: The Federal Board of Revenue (FBR) has introduced substantial amendments to the Customs Act, 1969, as part of the Finance Act 2025. These changes aim to enhance revenue collection, streamline import and export processes, and promote economic growth.

The 2025 amendments to duty rates bring significant changes across multiple sectors — from textiles and electronics to building materials, automobiles, and beyond.

Key changes included Cargo Tracking System (CTS), tariff rationalisation, reduction in Additional Customs Duty (ACD) rates, Regulatory Duty (RD) Regime, exemption regime, and sector-specific changes.

So far as CTS is concerned, a new section 83C has been added to the Customs Act, 1969, introducing CTS to monitor imports, exports, and transit goods. The system will be implemented once the necessary technological infrastructure is developed.

On the tariff rationalisation front, new tariff slabs of 5%, 10%, and 15% have been introduced, while existing slabs of 3%, 11%, and 16% have been abolished. The 0% tariff slab has been extended to further 916 PCT codes.

Similarly, Additional Customs Duty (ACD) rates have been reduced on various tariff slabs, including 0%, 5%, and 10%, with some exceptions.

In addition, Regulatory Duty (RD) rates have been revised downward on 1011 PCT codes, with a maximum rate reduction from 90% to 50%.

On the front of exemption regime, 479 entries in Part-1, Part-III, and Part-VII of the Fifth Schedule to the Customs Act, 1969, have been deleted to streamline and reduce the cost of exemptions.

Regarding sector-specific changes, knitted fabrics will now attract a duty rate of 20% or Rs 115/kg, whichever is higher in textiles. Interactive Flat Panel Displays will attract a duty rate of 20% in electronics.

Duty rates on motor vehicles for transport of goods and passengers have been revised in automobiles and duty rates on solar cells and modules have been reduced in solar energy sector.

So fast as implementation is concerned, the changes are effective from various dates, including February 2, 2025, and May 1, 2025. The FBR has directed concerned officers and officials to carefully review the budget documents to avoid misinterpretation or misapplication of the budgetary measures.