In a major tariff reform move, the Federal Board of Revenue (FBR) has issued two key statutory regulatory orders (SROs) to rationalize customs duties and reduce import-related taxes on a wide range of items, effective from July 1, 2025.

The FBR issued SRO.1151(I)/2025 and SRO.1152(I)/2025 on Monday, targeting Additional Customs Duties (ACDs) and Regulatory Duties (RDs) under the government’s customs tariff rationalization plan.

Under the new framework, regulatory duties have been reduced on 1,022 imported items, while ACDs will now apply only to select goods. Importantly, no RD will be charged on goods falling under customs duty slabs of 0%, 5%, and 10%, a move expected to lower import costs for a wide array of products.

• ACD of 2% will now apply to items in the 15% tariff slab, items covered under SRO.655(I)/2006 and SRO.656(I)/2006, specified PCT codes, and CKD kits of vehicles exceeding 1,000cc.
• A 6% ACD will be levied on items under the 30% tariff slab and higher, including specific rate slabs.
• The value of goods for ACD purposes will be determined under Sections 25 or 25A of the Customs Act.
• The new regime aims to reduce overall tariff levels from the current 20.19% to 9.70% over five years.
• The government plans to rationalize duty slabs to four tiers: 0%, 5%, 10%, and 15%, down from five currently.
• ACD slabs will be eliminated over four years, covering 7,500 items, with exemptions for lower duty items.
• RD slabs will be phased out in five years, reducing the maximum RD rate from 90% to 50%.
• RDs will be completely removed on 554 raw materials and intermediate goods, while reduced rates will apply to 602 goods.

Exemptions from ACD (SRO.1151)

The additional customs duty will not apply to the following:

• Plant and machinery under Chapters 84 and 85
• Imports under Chapter 99 and the Fifth Schedule, excluding specified items
• Items under baggage rules, temporary importation schemes, and specific SROs including SRO.577(I)/2005, SRO.565(I)/2006, and SRO.693(I)/2006
• Offshore project imports by Exploration and Production (E&P) companies
• Import of CKD vehicles up to 1,000cc and CBU vehicles up to 850cc

Exemptions from RD (SRO.1152)

• Under the new notification, regulatory duty will not be charged on:
• Imports under Chapter 99 and Fifth Schedule
• Temporary imports, including raw materials and components for local manufacturing
• Special steel, electrical steel sheets, rubber aprons, and auto parts inputs under SRO.655(I)/2006
• Import of CBU vehicles by new entrants
• CKD/SKD kits for home appliances, which will be subject to a reduced 5% RD

This sweeping reform is part of Pakistan’s broader effort to simplify the tariff structure, make imports more cost-effective for manufacturers, and enhance ease of doing business—especially in sectors like automotive, electronics, and industrial machinery.

The government expects the reduction in para-tariffs to spur investment, lower inflationary pressures, and support domestic industries relying on imported inputs.