Order issued to stop misuse of tax relief

The Federal Board of Revenue (FBR) has issued a new Customs General Order (CGO) No 8/2025 to ensure secure transportation and transparent clearance of plant, machinery, equipment and industrial raw materials imported at concessional sales tax rates for industrial units located in erstwhile FATA and PATA.

The new order applies to those industrial units that are availing concessional tax rates under Clause 89 of the Eighth Schedule of the Sales Tax Act, 1990. This new procedure is a continuation of the previously enforced CGO 01/2021. In 2018, the federal government provided special exemptions from sales tax and income tax through SRO 1212 and SRO 1213 to support the rehabilitation and development of the industrial sector in federally and provincially administered tribal areas – FATA and PATA.

Later, through the Finance Act 2019, these exemptions were formally incorporated into law. From 2018 to March 2021, industrial units in FATA and PATA imported their machinery, equipment and raw materials via Karachi Port under these SROs.

However, manufacturers from settled areas raised concerns that irregularities might occur in the movement of goods under these concessions. Following these concerns, the FBR imposed the condition that all concessional imports must be cleared from the Azakhel Dry Port under the Monitoring and Tracking of Cargo Rules, through the bonded carrier system, to ensure complete oversight and tracking of goods.

Later, the Finance Act 2025 partially withdrew the earlier full tax exemption and imposed a phased 10% sales tax while retaining the condition of clearance and tracking via Azakhel Dry Port. Several industrial units challenged this decision in the Peshawar High Court, where they were temporarily allowed to clear goods from Karachi Port without tracking and without bonded carriers. However, in its final judgment, the court ruled that the FBR may issue a new, transparent and effective mechanism.