How to Calculate Custom Duty

Posted by arhamkhan on January 12th, 2021

Estimation of import duty allows determining the actual cost of products as you import them to or from Pakistan. This can be seen in the fields of financial viability, fiscal criteria, or supply chain financing.

This is especially important for merchants and producers seeking to import diverse products to be used for a variety of purposes.

In this blog, we will discuss how various duties are imposed on manufactured goods, and then we will also see how they are measured. This will also give you tools to assist you in calculating the duties of any product.

What is Customs Duty?

Customs duty is a form of a duty imposed by the Government if any goods or services are purchased from outside the country. This is normally paid at the time of customs clearance in Pakistan.

In Pakistan, measuring the customs duty means that we want to know all the duties and taxes imposed on your manufactured goods, which is often known as the goods’ duty framework.

Why is it important?

When buying merchandise, the importers must be informed of the duty arrangement and determine whether they can import the goods.

How to calculate Custom Duty?

You must follow the below-listed steps in calculating customs duty:

Know the product

In order to determine the customs duty on any goods, you need to know the following:

• CFR The price of your products being shipped.
• Sea freight rate (if the price of your manufactured products is for FOB)
• Strong HS Code.
• Sea liability charges payable (optional)

Know the Duty Structure

Before beginning the estimate, we need to know about the product Customs Duty Structure.

To do so, just go to the official Pakistan Customs Site, WeBOC, and type your HS Code in the field and click Enter.

Calculate the Declared Value to Customs

First and utmost, you are expected to determine the stated value of Pakistan Customs.

You are allowed to apply a Marine Insurance Rate in USD to your products’ price to measure this declared value. If you do not have a Marine Insurance Amount as per Pakistan Customs, please accept 1 per cent of your CNF value as a Marine Insurance Amount.

Upon receipt of the sum, you are expected to apply a landing fee, which is 1% of the total CNF and Maritime Insurance, as per Pakistan Customs.

Convert Declared Value to Customs in PKR

This phase is quick; you just have to get the NBP Rate Sheet exchange rate and transform the foreign currency to the Pakistani Rupee.

Calculate your Duties

To measure the customs tax, just multiply the customs duties with the customs duty’s declared value.

Calculate Sales Tax

Today, in order to determine the sales tax and the extra sales tax, you are allowed to apply the reported amount to customs and complete duties.

Calculate Withholding Income Tax

Now, in order to determine the withholding tax, you are allowed to apply the balance of the reported value to tariffs, total duty, and total sales tax.  Next, measure withholding tax.

Calculate the Excise Duty

Excise duty shall be assessed based on the reported value to customs and determined based on the logistic companies’ schedule.

Calculation of Total Duties and Taxes payable

You can take help from a total duties and taxes table from the FBR website that needs to be paid to the FBER. After putting in so much effort, you must select the best logistic company near you. Make sure to give your products to the right hands.