Tariff Policy Board backs customs duty exemption on defence imports from July 2026

The Tariff Policy Board (TPB) has unanimously recommended exempting defence imports from the existing 15% customs duty from July 1, 2026, following directives from Prime Minister Shehbaz Sharif and consultations among key economic and defence authorities, Business Recorder reported, citing sources.

According to sources, the Ministry of Defence had submitted a summary to the prime minister on November 13, 2025, seeking exemption from the duty to provide financial relief and create additional fiscal space for meeting operational requirements.

The prime minister approved the proposal and directed the Finance Division and the Federal Board of Revenue (FBR) to complete the necessary legal and procedural requirements for granting the exemption.

Sources said a subsequent meeting, chaired by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, was attended by the Secretary Finance, the Secretary Commerce, the Secretary Defence and the Chairman of the FBR to discuss implementation of the decision.

During the meeting, participants concluded that due to procedural and technical requirements, the exemption could not be introduced during the current financial year.

It was therefore decided that the customs duty exemption would be implemented through the Finance Act 2026-27 and take effect from July 1, 2026.

According to sources, Secretary of Commerce Jawad Paul informed the board that, in line with the prime minister's directive, approval of the Tariff Policy Board was required as the competent forum to recommend the exemption so that it could be incorporated into the upcoming finance legislation.

He also noted that obtaining any required approval from the International Monetary Fund (IMF) regarding the proposed exemption would be the responsibility of the Ministry of Finance.

After deliberations, members of the Tariff Policy Board unanimously endorsed the proposal and recommended that the exemption be granted through amendments to the Fifth Schedule of the Customs Act, 1969.