The Federal Board of Revenue (FBR) has announced a significant increase in customs duties on a wide range of imported goods, effective July 1, 2024. This move aims to generate additional revenue for the government and potentially curb the import of luxury and non-essential items.

The most notable change is the imposition of a 2% additional customs duty (ACD) on over 2,200 items, including components for the assembly of vehicles, tractors, and other machinery.

This ACD applies to goods previously subject to zero percent duty. Additionally, the FBR has levied regulatory duties (RD) ranging from 5% to 55% on 657 luxury and non-essential items.

Among the items facing increased duties are:

• Cars, Jeeps, Light Commercial Vehicles (CKD) exceeding 1,000cc: 7% ACD
• Heavy Commercial Vehicles (CKD): 7% ACD
• Perfumes and Sprays: 20% RD
• Watches: 30% RD
• Sunglasses: 30% RD
• Imported Cycles: 10% RD
• Dairy Products: 20-25% RD
• Natural Honey: 30% RD
• Dates and Other Fruits: 25% RD
• Cosmetics: 55% RD
• Shaving Cream and Soap: 50% RD
• Gents and Ladies Apparel: 10% RD
• Imported Jewelry: 45% RD
• Oral Hygiene Products: 50% RD
• Cheese and Curd: 25% RD
• Potatoes and Other Vegetables: 50-55% RD
• Sugar Confectionery: 40% RD
• Tobacco: 50% RD
• Pet Food: 50% RD
• Leather Apparel and Accessories: 50% RD
• Video Game Consoles and Machines: 50% RD

The FBR has clarified that certain imports will be exempt from these new duties, including Imports under specific notifications: SRO.678, Chapter 99 of the First Schedule of the Customs Act, Temporary Importation Scheme, Fifth Schedule to the Customs Act, and others.

Also exempted are specific items such as special steel round bars and rods, rubber aprons and cots, vehicles (CBU) by new entrants, input materials for auto parts manufacturing, and electric vehicles (2-3 wheelers) till June 30, 2025.

The FBR’s move is expected to have a significant impact on the import sector and consumer prices. The government hopes that these measures will help to improve the country’s trade balance and reduce reliance on foreign imports.

However, the increased duties are likely burden consumers and businesses, potentially hindering economic growth.