Pakistan has the benefit of its Southern disposition in the world which can link it to several parts of the world through the Arabian Sea. The ports of Pakistan have enabled the trade of several products in and out of the country. This is beneficial for the financial stability of the country. Along with financial stability, importing goods can make a diversity of products available to the public. Automobiles are widely imported by people of Pakistan from different countries. However, to accomplish this, they have to pay customs duties. Payment of customs duty and the importing of vehicles is complex for many people. Most of the newbies need guidance about how to pay customs duty on cars. We have covered the details about all the procedures for safe import of vehicles and the duty or tax people have to pay on the vehicle.
When people choose to import cars by themselves, it becomes complex because it is difficult to estimate the amount that they will have to pay for the car and how they are going to carry out the whole process.
How to Pay Customs Duty on Cars in Pakistan – Complete Guide
Knowing the basics
Before registering and importing, the people have to acquaint themselves with the procedure and basics of customs. It is important so that they can easily understand everything about why is custom duty paid. The answer is, it is paid to legitimize the status of vehicles. If the duty is not paid against the import of a car, it will not be legally recognized and can get you in trouble. The documents needed to import a vehicle are Goods Declaration, Purchase receipt of Vehicle, Bill of Lading, Attested photocopy of passport or CNIC.
After you have known all the basics, you need to take a few other steps before the purchase. Firstly, you have to register yourself for customs with the Federal Board of Revenue (FBR). You can download the application form from the Web-Based One Customs (WeBOC), after filling the form it has to be submitted to deputy collector WeBOC User-ID Section with all the required documents. Personal appearance and digital picture and thumb impression of the applicant is needed. If the application is accepted, the applicant is issued a Log-in and password against a User-ID so they could access the Custom Portal and carry out the procedure.
Rules of vehicle import
To completely understand how to pay customs duty on cars, it is important that minor details are noted. Anyone can import new or used cars freely in Pakistan against the payment of customs duty and taxes after following a specific procedure set by the government of Pakistan under the Import Policy Order. Pakistani residents as well as Pakistanis living abroad and dual nationals can also import cars in Pakistan.
There are three schemes under which old and used car could be imported:
- Personal baggage
- Gift scheme
- Transfer of residence
But the import of cars is limited to a period. Old and used cars that are under 3 years of age can be imported and other vehicles that are less than 5 years older could be imported. But older cars are not allowed to be imported by the Government.
The custom duty remains the same under all the schemes of imports and there is no change in the amount to be paid against a vehicle whatsoever. Non-earning members of Pakistani nationals living abroad are not eligible to import if they have imported, received, or gifted a vehicle in the past two years.
Disabled people can import up to 1350cc new cars without any duty by the recommendation of the Federal Board of Revenue. To import a car through the transfer of residence or under the gift scheme is a minimum of 700 days of residence during the past three years and the vehicle could only be gifted to a family member like parents, spouse, children, and now the government has allowed to gift it to siblings as well.
The taxes and duties on cars are not based on the weight and value of the product but customs on vehicles vary from cars to cars because all cars are not the same and they vary in terms of size, type, and engine displacement which makes them different and different amounts of tariffs have to be paid against them. There is no relief or exemption for any person on import of cars. The charges of custom duty do not remain the same and fluctuate with the changes in the International currency rate. When USD’s(United States Dollar) rate changes, the customs also change so the estimated amount of import of cars is not the final price and you may have to pay higher than the estimated price or lower if, luckily, USD’s rate gets lower.
Information required to calculate customs duty on cars
The information which is required to get an estimate of the value of imported cars is:
- The year in which car is made
- Engine power
- Car type (hybrid or gasoline)
How do custom duties vary?
Before understanding how to pay customs duty on cars, it is important to know the details of the cars you want to import. The amount of duty varies according to engine power. Here, we have explained which engine displacements fall into the same category of customs payment:
- 660cc to800cc cars will behave the same customs duty.
- 801cc to 1000cc will be equal.
- 1001cc to 1300cc cars will have the same custom charges.
- 1301cc to 1500cc cars will be equal in custom duty.
- 1501cc to 1800cc cars will have the same custom charges.
The government of Pakistan has given relief on the import of hybrid vehicles. The hybrid vehicles up to 1800cc have 50 percent relief in customs and cars above 1800cc have 25 percent relief on the import. This relief is due to the cost-efficiency of these cars so the import of oil could be reduced. They are not only fuel economical but also environmentally friendly, so the government supports the import of hybrid vehicles.
Percentage of duty on cars
There is a 50 percent duty on the import of new cars up to the capacity of 1300cc engine displacement, 65 percent duty is charged on the import of cars up to 1800cc and 75 percent duty has to be paid against the import of cars above 1800cc engine displacement. While the duty on the two-years-old car up to 1300cc is only 2 percent, the government prefers the import of heavy-duty vehicles on which the customs duty could be decreased up to 75 to 100 percent.
Additional charges on customs duty
The import of cars is not only limited to the payment of customs duty and the price of cars, there are many additional charges that the buyers have to undertake. Assume you want to import a 600cc car in Pakistan. The total charges on the import are listed below
- Assumed Winning Auction Price or the purchase price of the car.
- Cost and Freight (C&F) charges.
- Import duty according to the set rules of FBR.
- Around Rs. 50000 for Challan, Shipping, excise, and other documentation.
- Custom agent fee (around 15000-20000).
- Passport fee (around 10000 to 15000).
- Transportation charges if you want to move your car from Karachi to some other city.
- Port rent charges.
The total of all these charges will be the actual amount of the car. It is important to know that the purchase price is calculated after adding the customs duty. Failure in payment of the customs duty will lead to the illegal status of the vehicle.
How to pay customs duty?
Customs duty is paid through WeBOC. When the application is accepted, the collector will issue a Log-In ID and password. These are used to access the profile where the e-payment of the customs duty will be done by creating a Payment Slip ID (PSID) for e-payment. Here is the procedure that you will have to undertake to pay for your imported car:
- First, you have to provide the document information required in the process like the bill of lading, receipt of purchase of a car, personal information, etc that you have to fill in the form.
- To create a PSID, you have to log in to the WeBOC page and enter your credentials.
- When you get to the homepage, click on the Goods Declaration option available on the left-hand side of the screen.
- After the pop-up menu appears, select the Consignment Category and Declaration Type from it.
- Once Goods Declaration age appears, fill in all the boxes with the required information and submit.
- When you have submitted, the GD Payment Mode Selection page will open.
- Under the payment through option, select the E-Payment method.
- Then fill in all the details about custom and other import charges and submit the form.
- It will show a Payment details page after you have submitted the payment details.
- Then you will get a generated PSID page that will show all the information about your custom payment.
It is important to keep in mind that your estimated amount of customs duty may not be the same as the generation PSID because of the changes in the exchange one rate that may make the price of the car higher or lower.