Pakistan's 2026-27 budget proposes Rs200 billion tariff cuts, customs reforms
Pakistan's 2026-27 budget proposes Rs200 billion in tariff cuts across 7,500+ industrial items, aligned with the National Tariff Policy 2025-2030. Here's what changes.
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Pakistan's federal government has proposed a Rs200 billion tariff rationalization package in its 2026-27 budget, targeting customs and regulatory duties across thousands of industrial tariff lines.
The measures, aligned with the National Tariff Policy 2025-2030, aim to lower production costs, improve competitiveness and support exports.
What tariff cuts are proposed in Pakistan's 2026-27 budget?
The budget proposes reducing taxes and duties on more than 7,500 industrial raw materials, components and machinery items. Customs duties on 92 tariff lines would be cut from 20% to as low as 10%, with some 5% duties eliminated entirely.
Additional customs duties and regulatory duties would also be reduced or abolished across thousands of tariff lines.
How are additional customs duties changing?
Additional customs duties would be cut on 449 tariff lines from 6% to 4%, and on 2,107 tariff lines from 4% to 2%. The duties would be abolished entirely on 569 items.
These reductions follow the trajectory set under the National Tariff Policy 2025-2030, which aims to simplify Pakistan's customs structure over the policy cycle.
What happens to regulatory duties under the new budget?
Regulatory duties above 20% would be capped at 20% across 359 tariff lines. A 20% reduction would apply to regulatory duties ranging from 2.5% to 20% on 1,347 tariff lines.
Duties on 208 additional items would be reduced or eliminated under the proposal.
Which sectors get specific exemptions?
Customs duties would be removed on key active pharmaceutical ingredients used in cancer treatment. Agricultural machinery would be exempt from customs duties, additional customs duties and regulatory duties. Customs duties on specialized construction vehicles would be cut from 20% to 10%.
The budget also proposes exemptions for defense-related imports, bulletproof vehicles imported for the Shanghai Cooperation Organization summit, and vehicles used in anti-terrorism operations by federal and provincial authorities.
What enforcement changes are included in the customs reforms?
Maximum fines for terminal operators that fail to honor delay detention certificates would rise from PKR500,000 to PKR10 million. Special judges would be authorized to freeze assets of individuals accused of illegally transferring funds across Pakistan's borders.
A new penal provision would criminalize the unauthorized removal or misappropriation of goods from state warehouses, with removal defined to include carrying, transporting, concealing or harboring smuggled goods.
How will customs proceedings be restructured?
The budget introduces faceless adjudication, allowing customs proceedings to be conducted virtually to reduce direct contact between officials and respondents.
Independent case scrutiny committees would review appeals to discourage frivolous litigation. Authorities would also be permitted to serve summons through newspaper publication when an accused person cannot be located.
The budget further provides legal cover for non-intrusive cargo scanning and requires confiscated goods under seizure proceedings to be handed over to customs authorities for legal action.
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