ISLAMABAD: The Tax Expenditure Report 2026 shows customs duty exemptions fell to Rs205.65 billion in FY2024-25 from Rs379.75 billion a year earlier, covering industrial machinery, pharmaceuticals, electric vehicles and essential imports.
The Federal Board of Revenue (FBR) has granted customs duty exemptions worth Rs205.65 billion under the Fifth Schedule of the Customs Act, 1969, during fiscal year 2024-25, according to the Tax Expenditure Report 2026.
The report showed that the total exemption amounted to Rs205.654 billion, compared with Rs379.745 billion in FY2023-24, representing a decline of approximately 45.8%.
Breakdown of customs duty exemptions
The largest exemption was granted to poultry, textile and miscellaneous sectors under Part III of the Fifth Schedule, amounting to Rs76.11 billion during FY2024-25, compared with Rs161.70 billion in the preceding year.
Importers of plant, machinery, equipment and apparatus for various industries received exemptions worth Rs38.47 billion, while the pharmaceutical sector benefited from Rs32.34 billion in customs duty relief on active pharmaceutical ingredients (APIs).
Exemptions for essential edible items, including pulses and potatoes, oil and petroleum products, and inputs for export-oriented sectors stood at Rs26.62 billion.
The electric vehicle sector received customs duty exemptions of Rs7.15 billion under Part V(A), while exemptions for completely knocked-down (CKD) and electric vehicle-specific parts amounted to Rs23.86 billion under Part V(B).
Other exemptions included Rs823.09 million for the aviation sector and Rs199.52 million for textile machinery and equipment.
No customs duty exemption was recorded for the automotive manufacturing sector under Part V during FY2024-25.
Overall tax expenditure declinesTax consultation services
The FBR report highlights the fiscal cost of customs duty concessions provided to different industries and import categories.
Total exemptions under the Fifth Schedule declined substantially from Rs379.74 billion in FY2023-24 to Rs205.65 billion in FY2024-25.
