FED Act 2005

The Federal Excise Act, 2005

[Chapters I & II i.e. sections 1 to 18 with schedules: for ICAP CFAP]
2. Definitions: Refer page 439 of the book
3. Duties specified in the First Schedule to be levied. (1) there shall be levied
and collected FED on,
(a) goods manufactured in Pakistan;
(b) goods imported into Pakistan;
(c) such goods as the Federal Government may specify, as are manufactured
in the non-tariff areas and are brought to the tariff areas for sale or
consumption therein; and
(d) services provided in Pakistan including the services originated outside but
rendered in Pakistan;
@ 15% ad valorem except the goods and services specified in 1 st Schedule, which
shall be charged to FED as, and at the rates, set-forth therein.
(2)
Duty in respect of goods imported into Pakistan shall be levied and
collected in the same manner and at the same time as if it were a duty of customs.
(3)
The Board may, in lieu of levying and collecting under sub-section (1)
FED on goods and services, levy and collect duties,
(a)

on the production capacity of plants, machinery, undertakings,

establishments or installations manufacturing such goods; or

(b) on fixed basis, as it may deem fit, on any goods or class of goods or on any
services or class of services, payable by any undertaking manufacturing
such goods or providing such services.
(3A) Further tax: Refer page 431 of the book.
(4)
the Federal Government may levy and collect duty on any class of
goods or services by notification in the official Gazette at such higher or lower rate
may be specified in such notification.
(5) The liability to pay duty shall be
(a) in case of goods manufactured in Pakistan, of the person manufacturing
such goods;
(b) in case of goods imported
goods;

into Pakistan, of the person importing such

(c) in case of services provided in Pakistan, of the person providing such

services, provided where services are rendered by the person out of
Pakistan, the recipient of such services in Pakistan shall be liable to pay
duty;
(d) in case of goods manufactured in non-tariff areas and brought to tariff
areas for sale or consumption therein, of the person bringing or causing to
bring such goods to tariff areas.

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FED Act 2005

4. Filing of return and payment of duty etc. (1) For every month, a registered
person shall furnish not later than the due date a true and correct return.
(2) Duty due for the dutiable supplies made or services rendered during a
month shall be deposited by the registered person in the designated branch of the
bank by the date as prescribed in this respect:
duty.

Provided that the Board may prescribe any other manner of depositing the

(4)
A registered person may, subject to approval of the Commissioner, file
a revised return within 120 days of the filing of return, to correct any omission or
wrong declaration made therein.
(5)
The Board may require any person or class of persons for any goods or
class of goods to furnish such summary or details of particulars pertaining to imports,
purchases, utilization, consumption, production, sales or disposal of such goods
during any month or months in such format and manner as may be specified and
provisions of this sub-section may be invoked mutatis mutandis in respect of
services.
(6)
The Board may specify the manner and procedure for filing of return
and for payment of duty by electronic means. The Board may specify the manner and
procedure for the submission, receipt and transmission of any information by
electronic means.
(8)

The Board may prescribe a composite return.

5. Zero rate of duty and drawback of duty etc. refer para 6 page 432 of
the book
6. Adjustment of duties of excise. refer para 7 page 433 of the book
7.
Application of the provisions of the Sales Tax Act. refer
para 9 page 433 of the book
8.

Default surcharge. refer para 11 page 434 of the book

9. Liability for payment of duty in the case of private companies or business

enterprises or in case of sale of business ownership. refer para 14 page
435 of the book
10.
Applicable value and rate of duty. The value and the rate of duty
applicable to any goods or services shall be the value, retail price, tariff value and the
rate of duty in force,.
(a) in the case of goods, on the date on which the goods are supplied for
export or for home consumption;
(b) in the case of services, on the date on which the services are provided;
and
(c) in the case of goods manufactured outside the areas to which this Act has
been applied and brought to such areas for sale or consumption therein,
the date on which the goods are brought to those areas.
11.

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Collection of excess duty etc. refer para 15 page 436 of the book

FED Act 2005

12.

Determination of value for FED. refer para 4 page 431 of the book

13. Registration. refer para 16 page 436 of the book.

14. Recovery of unpaid duty or of erroneously refunded duty or arrears of
duty, etc.refer para 12 page 434 of the book.
14A. Short paid amounts recoverable. refer para 13 page 435 of the book
15.
Application of the Customs Act to FED. The Federal Government may
declare that any or all of the provisions of the Customs Act, shall, with such
modifications and alterations it may specify, consider necessary or desirable to adapt
them to the circumstances, be applicable in regard to like matters in respect of the
duties levied by sections 3 and 8.
16.
Exemptions. (1) All goods imported or manufactured in Pakistan and
services provided except such goods and services as are specified in 1 st Schedule
shall be exempt from whole of excise duties levied u/s 3:
Provided that goods and services specified in 3 rd Schedule shall be exempt
from duty subject to specified conditions and restrictions, if any, and no input tax
adjustment shall be admissible in this case.
(2)
The Federal Government may, pursuant to the approval to the
Economic Coordination Committee of Cabinet, whenever circumstances exist to take
immediate action for the purposes of national security, natural disaster, national food
security in emergency situations, protection of national economic interests in
situations arising out of abnormal fluctuation in international commodity prices,
removal of anomalies in duties, development of backward areas, implementation of
bilateral and multilateral agreements and matters relating to international financial
institutions or foreign government-owned financial institutions, by notification in the
official Gazette, exempt subject to such conditions as may be specified therein, any
goods or class of goods or any services or class of services from the whole or any
part of the duty leviable under this Act.
(3)
the Federal Government or the Board may, for reasons to be recorded,
exempt any person or class of persons from payment of the whole or part of the
default surcharge imposed u/s 8 and penalties subject to specified conditions or
limitations.
(4)
The Federal Government shall place before the National Assembly all
notifications issued under this section in a financial year.
(5)
Any notification issued under sub-section (2) after 1.7.2015, shall, if
not earlier rescinded, stand rescinded on the expiry of the financial year in which it
was issued.
17.

Records. refer para 17 page 437 of the book.

18.

Invoices. refer para 18 page 437 of the book.

FIRST SCHEDULE
TABLE 1 (EXCISABLE GOODS)

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FED Act 2005

S. No.
1
2
3
4
5
6

7
8

Description of Goods
Edible oils excluding epoxidized soybean oil
Vegetable ghee and cooking oil
Concentrates for aerated beverages including syrup
form
Aerated waters
Aerated waters, containing added sugar or other
sweetening matter or flavored
Aerated waters if manufactured wholly from juices or
pulp of vegetables, food grains or fruits and which do
not contain any other ingredient, other than sugar,
colouring materials, preservatives or additives
Un-manufactured tobacco

35
36

Cigars, cheroots, cigarillos and cigarettes, of tobacco

or of tobacco substitutes.
For the period from 1.12.2016 onwards, locally
produced cigarettes if their on-pack printed retail
price exceeds Rs.4,400 per thousand cigarettes
For the period from 1.12.2016 onwards, locally
produced cigarettes if their on-pack printed retail
price does not exceed
Rs.4,400 per thousand cigarettes
Omitted
Cigarettes manufactured by a manufacturer who
remains engaged on and after 10.6.1994 in the
manufacture of any brand of cigarette in non-tariff
areas.
Cement
Omitted
Liquified natural gas per 100 cubic meters
Liquified propane per 100 cubic meters
Liquified butanes per 100 cubic meters
Liquified
ethylene,
propylene,
butylenes
and
butadiene per 100 cubic meters
Other liquified petroleum gases per 100 cubic meters
Natural gas in gaseous state

37

Other petroleum gases in gaseous state

9b
10b

11
12

13
14-30
31
32
33
34

38-40
41
42-53
54
55

72

Omitted
Flavors and concentrates for use in aerated beverages
Omitted
Oilseeds
Imported cars, SUVs and other vehicles of 1800 cc or

Rate
16% ad
16% ad
50% ad

of Duty
val.
val.
val.

11.5% of retail
price
11.5% of retail
price
11.5% of retail
price
Rs.10 per
kilogram
65% of retail price
Rs.3,705
thousand
cigarettes
Rs.1,649
thousand
cigarettes

per
per

65% of retail
price.
Re.1 per kilogram
Rs.17.18
Rs.17.18
Rs.17.18
Rs.17.18
Rs.17.18
Rs.10 per Million
British Thermal
Unit (MMBTu).
Rs.10 per Million
British Thermal
Unit (MMBTu).
50% ad val.
40 paisa per kg
10% ad.val.

FED Act 2005

56

above, principally designed for the transport of

persons, including station wagons and racing cars of
1800 cc or above.
Filter rod for cigarettes

Rs.0.75 per filter

rod

Minimum Price of New Brands of cigarettes. Any new brand introduced in the
market shall not be priced and sold lower than 5% below the price of the Most
Popular Price Category (MPPC). MPPC is the price point at which the highest number
of FED paid cigarettes are sold in the previous fiscal year.
FIRST SCHEDULE
TABLE II (EXCISABLE SERVICES)
S. No.
1
2
2A

Description of Goods
Advertisement on closed circuit TV
Advertisements on cable TV network.
Advertisements in newspapers and periodicals
(excluding classified advertisements), and on
hoarding boards, pole signs and sign boards.

Facilities for travel

(a)
Services provided in respect of travel by
air of the passenger within Pakistan
(i) Long routes
(ii) Short routes

Rate of Duty
16% of the charges
16% of the charges
16% of the charges

Rs.2,500
Rs.1,250

Explanation.- For the purpose of this

entry, Long routes means journeys
exceeding 500 km, Short routes means
the remaining journeys, other than socioeconomic routes as defined in S. No. 9 of
Table II of 3rd Schedule.
(b)
(i)
(ii)
4
5

Services provided in respect of travel by

air of the passengers embarking on
international journey from Pakistan,Economy and economy plus
Club, business and first class.

Inland carriage of goods by air.

Shipping agents.

Rs.5,000
Rs.10,000
16% of the charges
(i) Rs.200 per housebill of lading issued in
case of Non-Vessel
Operating Common
Carriers (NVOCC),
International Freight

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FED Act 2005

7
8

9-10
11
12
13
14
15

Telecommunication services, excluding such

services in a Province where such Province has
imposed Provincial sales tax and has started
collecting the same through its own Board
Omitted
Services provided or rendered by banking
companies, insurance companies, co-operative
financing societies, modarabas, musharikas,
leasing companies, foreign exchange dealers,
non-banking financial institutions, Assets
Management Companies and other persons
dealing in such activities
Omitted
Franchise services
Omitted
Services provided or rendered by stockbrokers
Services provided or rendered by port and
terminal operators in relation to imports
excluding stevedoring services.
Chartered flights

Forwarders and Slot

Carriers
(ii) 16% of the charges
in case of other
categories of shipping
agents.
18.5% of the charges

16% of the charges

10% of the charges

16% of the charges
16% of the charges
16% of the charges

Note. The duty on the services as specified against serial numbers 1, 2, 2A, 5, 8, 11
and 13 shall not be levied on services provided in a Province where the provincial
sales tax has been levied thereon.
SECOND SCHEDULE
(Goods on which duty is collectible under sales tax mode with
entitlement for adjustment with sales tax and vice versa)
S. No.
1
2

Description of Goods

GOODS

Edible oil excluding epoxidized soyabean oil

Vegetable ghee and cooking oil.
THIRD SCHEDULE
[Conditional exemptions]
TABLE I (GOODS)

S. No.
1

74

Description of Goods
Crude vegetable oil, if obtained from the locally grown seeds excluding
cooking oil, without having undergone any process other than the process

FED Act 2005

2
3
4

5
6

7
8
9
10

11
12

of washing.
Omitted
Un-manufactured tobacco or tobacco refuse if used for the purposes other
than the manufacture of cigarettes, smoking mixtures for pipes and
cigarettes and cigars and cheroots.
Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes,
(i)
If supplied to Pakistan Navy for consumption by its personnel on
board its vessels.
(ii)
If made by hand in tapered shape of biris without the use of any
manual or power operated machine in any process of their
manufacture.
(iii)
If supplied for consumption by the Presidents of Pakistan and Azad
Jammu & Kashmir and the Governors of the Provinces, members of
their families and guests provided that the cigarettes are supplied
on the specific written orders of the competent official authority
and the cigarettes and their packets are special-crested for the
respective privileged House.
(iv)
If supplied against payment in foreign exchange, to Duty Free
Shops Ltd for sale in its Duty Free Shops and on board international
flight by PIA
Omitted
Motor spirit,-(i)
If supplied to Pakistan Navy for consumption in its vessels.
(ii)
If supplied for consumption by the International Bank for
Reconstruction and Development in its official cars.
Omitted
Omitted
Sludge and sediment recovered from storage tanks of the incoming
vessels or ships meant for breaking.
Natural gas if produced and used in the same field for drilling, production,
pressure maintenance or in any other joint operations including flaring in
the same field.
Explanation.For the purpose of this entry, Joint Operations
means all marine and land activities, including gas exploration,
prospection, development and production activities conducted by Working
Interest Owners under a petroleum concession agreement with the
Government.
Carbon black oil (carbon black feed stock) if imported by a manufacturer
of carbon black.
Goods,-(i)
If donated to the Presidents Funds for Afghan Refugees, Assistance
to Palestine and Famine Relief for Africa subject to certain
conditions.
(ii)
If purchased by the Cabinet Division of Government for donation to
a foreign country in the event of natural disasters.
(iii)
If supplied against international tender issued by UNICEF, UNDP,

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FED Act 2005

13
14
15
16

17
18
19

20

WHO, WFP, UNHCR, International Red Cross or any other relief

agency, for Afghan Refugees subject to specified conditions
(iv)
If supplied as ship stores to ships and aircrafts leaving for abroad
Goods imported or supplied under grants-in-aid
Goods if imported as bona fide baggage.
Goods if imported by Duty Free Shops as baggage free of custom duty,
regulatory duty and sales tax under the baggage rules
Any goods which are manufactured in-house by a registered person and
used for the manufacture of goods on which duty of excise is paid by such
person.
Explanation. Exemption under this entry shall also be admissible
on unmanufactured tobacco purchased and used after necessary
treatment in the manufacture of cigarettes and other excisable tobacco
products.
Goods for further manufacture of goods in the Export Processing Zones
Omitted
Materials and equipment for construction and operation of Gawadar Port
and development of Free Zone for Gawadar Port as imported by or
supplied to China Overseas Ports Holding Company Ltd and its operating
companies namely (i) China Overseas Ports Holding Company Pakistan
(Private) Ltd, (ii) Gwadar International Terminals Ltd, (iii) Gwadar Marine
Services Ltd and (iv) Gwadar Free Zone Company Ltd, their contractors
and sub-contractors; and Ship Bunker Oils bought and sold to the ships
calling on/visiting Gawadar Port, having Concession Agreement with the
Gwadar Port Authority, for a period of 40 years.
Supplies made by the businesses to be established in the Gwadar Free
Zone for a period of 23 years within the Gwadar Free Zone, subject to the
condition that the sales and supplies outside the Gwadar Free Zone and
into the territory of Pakistan shall be subjected to FED.
THIRD SCHEDULE
TABLE II (SERVICES)

S. No.
1
2

3
4
5

76

Description
Advertisements financed out of funds provided under grants-in-aid
agreements.
Telecommunication services:
(i)
Internet services whether dialup or broadband including email
services, Data Communication Network Services (DCNS) and Value
added data services
(ii)
Such charges payable on the international leased lines or
bandwidth services used by software exporting firms and data and
internet service providers
(iii)
Such amounts received by the Long Distance International license
holders including PTCL on International incoming calls under
agreements with the foreign telecommunication companies.
Marine insurance for export
Life insurance
Health insurance

FED Act 2005

6
7
8
9

10

11
12
13

Crop insurance
Live stock insurance
Omitted
Services provided in respect of travel by air of passengers on socioeconomic routes, which means the shortest part of journeys starting from
or ending at an airport located in Makran coastal region, FATA, Azad
Jammu and Kashmir, Gilgit-Baltistan or Chitral
Services provided or rendered in respect of travel by air of passengers on
international journeys from Pakistan to:
(a) Hajj passengers;
(b) Diplomats; and
(c) Supernumerary crew
Advertisements in newspapers and periodicals
Services provided by banking companies and non-banking financial
companies in respect of Hajj and Umrah, cheque book, insurance,
Musharika and Modaraba financing and utility bill collection.
Chartered flight services used by or for armed forces to move troops and
equipment deployed locally or internationally, including those for
movement of troops and equipment to UN mission

77