Importers in Pakistan pay multiple taxes at the import stage: Customs Duty (varies by product), 18% GST on import, and Income Tax Advance (Section 148) ranging from 1% to 6% for active filers depending on goods category. Non-filers pay double these rates. Commercial importers pay more than industrial importers. All collected by the Collector of Customs at clearance.
The Four Taxes Importers Pay in Pakistan
Customs Duty (CD)
Based on Pakistan Customs Tariff (PCT) heading. Ranges from 0% to 25%+ depending on product category.
Sales Tax on Import (GST)
Standard 18% on import value plus customs duty. Recoverable as input tax credit if you are sales-tax registered.
Income Tax Advance — Section 148
Advance income tax collected at import by the Collector of Customs. Minimum or adjustable tax depending on category and importer type.
Federal Excise Duty (FED)
Applicable on specific goods: tobacco, sugar, aerated drinks, petroleum products, certain vehicles.
Section 148 — Income Tax WHT on Imports (Tax Year 2026)
Section 148 requires the Collector of Customs to collect advance income tax at import clearance. The rate depends on which part of the Twelfth Schedule the goods fall under and whether the importer is commercial or industrial. The following table is drawn from the KPMG WHT Rate Card for Tax Year 2026:
| Category | Goods Description | Active Filer % | Non-Filer % | Nature |
|---|---|---|---|---|
| Sec 148-I | Goods in Part I of Twelfth Schedule | 1% | 2% | Min / Not Min (industrial own use) |
| Sec 148-II | Part II goods — non-commercial importer | 2% | 4% | Min / Not Min (industrial own use) |
| Sec 148-III | Part III goods — non-commercial importer | 5.5% | 11% | Min / Not Min (industrial own use) |
| Sec 148-IV | Manufacturers under rescinded SRO 1125(I)/2011 | 1% | 2% | Adjustable |
| Sec 148-V | Finished pharma products not made in Pakistan (DRAP certified) | 4% | 8% | Minimum |
| Sec 148-VI | Import of Mobile Phones | Varying | — | Minimum |
| Sec 148-VII | CKD kits of electric vehicles (small cars/SUVs ≤50 kWh, LCVs ≤150 kWh) | 1% | 2% | Minimum |
| Sec 148-VIII | Commercial importer — Part II of Twelfth Schedule | 3.5% | 7% | Minimum |
| Sec 148-IX(a) | Commercial importer — Part III of Twelfth Schedule | 6% | 12% | Minimum |
| Sec 148-IX(b) | Edible oil, packaging material, paper & paperboard, plastics | 1–6% | 2–12% | Minimum |
Non-filer penalty: Per the KPMG Tax Year 2026 Rate Card, persons not on the Active Taxpayers List face 100% increased withholding tax rates under the First Schedule. Every import clearance doubles your Section 148 cost — a recurring cash-flow hit eliminated by maintaining filer status.
Commercial vs Industrial Importer
Buys to Resell
Imports finished goods for onward domestic sale.
- Part II goods: 3.5% Sec 148 (active filer)
- Part III goods: 6% Sec 148
- Tax nature: Minimum Tax
- Higher rate — reflects trading margin
Imports for Own Manufacturing
Imports raw materials or components for own production.
- Part II goods: 2% Sec 148 (active filer)
- Part III goods: 5.5% Sec 148
- Tax nature: Can be adjustable for own-use
- Lower rate — supports manufacturing
Import Cost Example — Commercial Importer (Active Filer)
If non-filer: Section 148 becomes 7% — an extra Rs 35,000 on this single import. GST on import is recoverable as input tax credit if you are sales-tax registered, making it a cash-flow cost rather than a final cost.
Minimum Tax vs Adjustable Tax
- Minimum Tax: The Sec 148 amount is the minimum income tax on that import. If your actual income tax liability is lower, you pay whichever is higher — no refund on the excess.
- Adjustable Tax: Sec 148 is a prepayment of your annual income tax. It's credited against your liability; overpayment is refundable.
- Not Minimum (industrial own-use): Industrial undertakings importing for own manufacturing may have their tax treated as adjustable, preserving the ability to recover excess payments.
Key Section 148 Exemptions (Second Schedule)
From the KPMG Tax Year 2026 Rate Card exemption table:
- Clause 77: Renewable energy items (solar panels, wind turbines) — exempt from Sec 148
- Clause 91: Prescribed agricultural equipment under PCT Chapter 84 — exempt
- Clause 60DA: Capital equipment for Special Technology Zone (STZ) developers and enterprises — exempt for 10 years from development agreement date
- Clause 12P: Machinery and equipment listed in S.No 32, Part-I of Fifth Schedule, Customs Act 1969 — exempt
- Clause 56: Federal/provincial/local government imports — exempt
- Clause 47A: If you imported goods and paid Sec 148, subsequent local resale of those same goods is exempt from Sec 153(1)(a) — preventing double taxation
Compliance Checklist for Import Businesses
- Register with FBR (NTN) — non-filers pay 100% more on every import. See: FBR Registration Guide →
- Register for Sales Tax (STRN) — mandatory for importers. Makes GST on import recoverable. See: Sales Tax Registration Guide →
- Obtain sector-specific import licenses — pharmaceuticals (DRAP), food (PSQCA), etc.
- File annual income tax return by September 30 to maintain ATL filer status.
- File monthly sales tax returns by 18th of each month, claiming input GST on imports against output GST on local sales.
- Maintain import records — Goods Declaration forms, invoices, packing lists, Bills of Lading, WHT deduction certificates — for 5+ years.
- Use ADR for disputes — the Third Amendment Act 2026 streamlined Section 134A; use it for any disputed customs valuation or tax assessment.