The Federal Board of Revenue (FBR) has disclosed that customs duty concessions and exemptions cost the exchequer an estimated Rs652.39 billion in fiscal year 2023-24, an amount equal to 0.62 percent of GDP and accounting for 26.8 percent of total tax expenditure.
According to the FBR’s newly issued “Tax Expenditure Report 2025”, the largest impact came from poultry, textile, and miscellaneous imports, which collectively resulted in a revenue loss of Rs161 billion under the 5th Schedule of the Customs Act. Within this, exemptions and reduced rates on essential edibles—including pulses, potatoes, oils, and inputs for export sectors—caused a shortfall of Rs124 billion in FY24.
The report further highlighted that duty-free imports from China under the Pakistan–China Free Trade Agreement (FTA) added another Rs47 billion in lost revenue during the same period.
Overall, the top 10 exemption categories consumed Rs566 billion, representing nearly 88 percent of all customs-related tax expenditure. These primarily covered imports of plant and machinery, equipment, chemicals, parts, and renewable energy technology.
The FBR noted that such concessions were extended in the form of reduced rates, zero-rated entries, and full exemptions, designed to support industry and trade but at significant fiscal cost.
