How to Pay Customs Duty on Cars in Pakistan - Complete Instructional Guide

ByFaisal Chughtai | Published date:

Pakistan has the advantage of being located in the globe's southern hemisphere, which allows it to connect with several different regions of the world via the Arabian Sea. The ports of Pakistan have facilitated the movement of a wide range of goods into and out of the nation.

This is advantageous to the country's financial stability. Along with providing financial stability, importing commodities may give the general people a greater variety of items. Automobiles are extensively brought into Pakistan by individuals from various nations.

On the other hand, Customs duties must be paid to do this. Many individuals find the payment of customs tax and the importation of automobiles to be complicated processes.

The majority of newcomers want assistance in determining how to pay customs tax on automobiles. We have gone over all of the procedures for ensuring the safe import of automobiles and the duties or taxes consumers must pay when purchasing a vehicle.

Customs Duty on Cars in Pakistan

When individuals opt to import automobiles on their own, the procedure gets more complicated since it is impossible to predict how much they will have to pay for the car and how they will go about the whole process.

Understanding the fundamentals

Individuals must get familiar with the customs process and fundamentals of the trading system before registering and importing, i. Because they must grasp everything about why customs duties are paid, it is necessary to provide detailed explanations.

The explanation is that it is delivered to legitimate the status of the automobiles in question. If the duty on the import of a car is not paid, the vehicle will not be legally recognized, and you may find yourself in legal difficulties.

The paperwork required to import a vehicle is the Goods Declaration, the Vehicle Purchase Receipt, the Bill of Lading, and an attested photocopy of the driver's license or passport.

Creating a profile for yourself

After you have mastered the fundamentals, you will need to complete a few further stages before making your purchase. First and foremost, you must register with the Federal Board of Revenue to become a customs agent (FBR). To apply, you must download and complete an application form from the Web-Based One Customs (WeBOC).

After completing the application form, you must send it to the deputy collector at the WeBOC User-ID Section together with all of the relevant papers. The applicant's physical appearance, as well as a digital photograph and thumb imprint, are required. If the application is approved, the applicant will be provided with a Log-in and password in conjunction with a User-ID, which will allow them to access the Custom Portal and complete the process.

Taxes and fees associated with customs

Taxes and duties on automobiles are not based on the weight and value of the product; instead, customs on cars vary from vehicle to vehicle because no two automobiles are the same; they differ in size, type, and engine displacement, making them distinct and necessitating the payment of different amounts of tariffs against each.

There is no remedy or exemption available to anybody concerning the importation of automobiles. The costs for custom duty do not stay constant and vary in response to changes in the value of the international currency exchange rate. When the USD (United States Dollar) rate changes, the customs rate varies as well; thus, the anticipated amount of import of automobiles is not the actual price, and you may have to pay more than the expected amount if the USD rate rises, or less if the USD rate falls, as the case may be.

Importation regulations for automobiles

It is important to pay attention to the minor details to fully comprehend how to pay customs tax on automobiles. Anyone may freely import new or used cars into Pakistan in exchange for the payment of customs duty and taxes after following a specified method established by the government of Pakistan under the Import Policy Order, which is available online.

Pakistani people and Pakistanis residing abroad and dual nationalities have the option of importing automobiles into the country. To import an old or used automobile, there are three different schemes to choose from:

  • Personal baggage
  • Gift scheme
  • Transfer of residence

On the other hand, the importation of automobiles is restricted to a specific time period. Old and used cars less than three years old may be imported, and other vehicles less than five years old have not been modified. On the other hand, older automobiles are not permitted to be imported by the government.

The customs tax stays the same under all of the importation schemes, and there is no change in the amount of money that must be given in exchange for a car in any way.

Non-earning family members of Pakistani citizens residing abroad cannot import a car if they have already imported, received, or given a vehicle during the previous two years, regardless of their income.

According to the Federal Board of Revenue's suggestion, disabled individuals may import new automobiles with displacements up to 1350cc without paying any duty.

Transfer of residence or gift scheme requirements include at least 700 days of continuous residence in the country during three years. Previously, vehicles could only be gifted to immediate family members such as parents, spouses, and children, but now the government has allowed siblings to receive the car as a gift, as well.

The percentage of tariff levied on automobiles.

The importation of new cars with engine displacements up to 1300cc is subject to a 50 percent duty; the importation of vehicles with engine displacements between 1300cc and 1800cc is subject to a 65 percent duty, and the importation of cars with engine displacements greater than 1800cc is subject to a 75 percent duty.

As opposed to light-duty vehicles, which have a duty of just 2 percent for cars older than two years and up to 1300cc, the government prefers to import heavy-duty vehicles, where the tax may be reduced by up to 75 to 100 percent.

Customs tax on automobiles is calculated using the information provided.

The following information is necessary to get an estimate of the worth of imported automobiles:

  • The year in which the car is manufactured
  • The engine's Power
  • Type of automobile (hybrid or gasoline)

What is the difference between custom duty and other taxes?

Before learning how to pay customs tax on automobiles, it is necessary to understand the specifications of the cars you want to import.

The amount of duty owed varies depending on the engine's horsepower. In this section, we've discussed various engine displacements that fall into the same category as customs payments, including:

1) Cars ranging in displacement from 660cc to 800cc will be subject to the same customs duties. 2) The displacement will be equivalent between 801cc and 1000cc. 3) Customs fees will be the same for automobiles ranging in displacement from 1001cc to 1300cc. 4) Customs tax on car displacement from 1301cc to 1500cc will be the same. 5) Customs fees will be the same for automobiles ranging in displacement from 1501cc to 1800cc.

The government of Pakistan has announced a reduction in the import duties on hybrid automobiles. Hybrid vehicles with engines up to 1800cc are eligible for a 50 percent customs exemption, whereas cars with engines larger than 1800cc are eligible for a 25 percent exemption.

This respite is due to the cost-effectiveness of these automobiles, which allows for a reduction in the amount of oil imported. Because hybrid cars are not only fuel-efficient, but they are also ecologically beneficial, the government encourages the importation of hybrid automobiles.

What is the best way to pay customs duty?

Customs duties are collected and paid via WeBOC. The collector will offer the applicant a Log-In ID and password after the collector has approved the application.

By generating a Payment Slip ID (PSID) for e-payment, they can access the profile where the e-payment of the customs duty will be completed. The following is the method that you will need to follow in order to pay for your imported automobile:

  • First and foremost, you must give the documentation information necessary in the procedure, such as a bill of lading, a receipt for purchasing a vehicle, personal information, and so on, which you must enter into the form.
  • For the purpose of creating a PSID, you must first log in to the WeBOC website and provide your credentials.
  • When you arrive at the site, choose the Goods Declaration option, which can be found on the left-hand side of the display screen.
  • Following the appearance of the pop-up menu, pick the Consignment Category and Declaration Type from the list that displays.
  • As soon as the Goods Declaration Age displays, complete all of the boxes with the necessary information and submit the form.
  • After you have provided your information, the GD Payment Mode Selection page will be shown.
  • Make a selection from the E-Payment method under the Payment Method drop-down menu.
  • Then fill out the form with all of the necessary information concerning customs and other import fees, and submit it.
  • After you have provided your payment information, you will be sent to a Payment Details page.
  • After that, you will be presented with a PSID page that has all your customized payment details.

The fact that your estimated customs duty may differ from the generated PSID due to fluctuations in the exchange rate that may cause the car's value to rise or fall is critical information to bear in mind when calculating your estimated customs duty.

Customs duties are subject to additional costs.

Besides the payment of customs duties and the purchase price of automobiles, there are several other fees and taxes that the purchasers must bear in order to bring their vehicles into this country.

Consider the following scenario: you wish to import a 600cc automobile into Pakistan. The total charges for the import are stated in the following.

  • It is assumed that the winning auction price or the automobile's purchase price will be achieved.
  • C&F (Cost and Freight) costs are incurred.
  • Import duty calculated in accordance with FBR regulations.
  • For the Challan, shipping, excise, and other necessary papers, around Rs. Fifty thousand would be required.
  • Customs agent commission (around 15000-20000).
  • The cost of a passport (around 10000 to 15000).
  • If you wish to transport your automobile from Karachi to another city, you will pay transportation fees.
  • Charges for port use.

Totaling all these costs will result in the actual cost of the vehicle. It is critical to understand that the purchase price is computed after applying the customs charge.

The failure to pay the customs duty will result in the car being classified as illegally imported.