Guides · EFS
EFS defers the duty on your inputs until the export obligation is discharged.
Shafiq Traders · Updated 14 September 2026
The Export Facilitation Scheme lets a registered manufacturer-cum-exporter, toll manufacturer, indirect exporter, commercial exporter or Common Export House bring in the inputs for an export order, imported or bought locally, without paying customs duty, sales tax, federal excise duty or withholding tax at the time of acquisition. Nothing is written off. In exchange, the exporter carries an export obligation: the input has to go into an output that actually leaves Pakistan within the utilisation period fixed for it, matched to an input-output ratio set for that product, and it is reconciled on a schedule until the file closes. The obligation is backed by a security instrument the whole time, not a promise on paper.
What the scheme actually does
EFS sits in Chapter XL of the Customs Rules, 2001, run through WeBOC and PSW as one authorisation instead of the separate approvals exporters used to hold under older schemes. It covers a manufacturer-cum-exporter making the value addition the rules require, a toll manufacturer working a foreign principal's contract, an indirect exporter supplying a direct exporter, a commercial exporter buying goods to export as they are, and a Common Export House that imports and warehouses on behalf of smaller exporters. Iron and steel scrap importers sit outside the scheme except for the copper content of compressor and motor scrap, and raw cotton, cotton yarn and grey cloth were taken out of it entirely in 2025.
Nothing about this is free. Every authorisation carries a security instrument, an indemnity bond and post-dated cheque at minimum, a bank guarantee on top of that for most categories, sized to the duty and tax being deferred rather than to the value of the export order. That instrument sits with the Collector for the life of the authorisation, and it is encashable the moment input goods go missing, sit past the utilisation period, or the value addition the rules require does not show up in the reconciliation.
DTRE and the manufacturing bond, folded in
DTRE and the manufacturing bond ran the same idea, duty deferred against an export obligation, through separate rulebooks and separate collectorates. EFS replaced both. Existing DTRE and bond approvals were given a wind-down window and then closed to new use, and an exporter cannot hold an EFS authorisation and one of the older approvals at the same time.
An old DTRE or bond approval still on a firm's books does not carry over into EFS automatically. It runs its course under its own rules, or the holder applies to revoke it and takes a fresh EFS authorisation instead. For a new export order today, there is no DTRE gate to apply through. It is EFS.
Where EFS differs from duty drawback
Drawback and EFS solve the same problem from opposite ends. Under drawback, duty is paid at import and repaid once the goods leave as an export; the claim is made at export, and payment does not move until the vessel sails. Our page on duty drawback for exporters covers how that claim actually works. EFS skips the payment stage altogether: nothing is collected on the input in the first place, provided the export obligation is met on schedule.
The two do not stack on the same input. An EFS user can still claim duty drawback, but only on stock that genuinely had duty paid on it, and only after every EFS obligation on that authorisation has been discharged. It is not a second route to recovering duty that was never paid to begin with.
Who qualifies, and for how long
| Category | Who fits it | Authorisation period |
|---|---|---|
| Category A | Manufacturer-cum-exporter exporting 60% or more of production, or with export value of USD 20 million or more in the last two years | Five years |
| Category B1 | Manufacturer-cum-exporter below that export share, with more than three years of export history | Four years |
| Category B2 | Manufacturer-cum-exporter below that export share, three years of history or less, or no history but a firm export contract | Two years |
| Category C1 | Indirect exporter, commercial exporter or toll manufacturer with more than three years of history | Four years |
| Category C2 | Same as C1, with three years of history or less | Two years |
How the ratio and the export obligation actually work
The sequence is what a Collector actually checks. Get the ratio or the timing wrong and the paperwork underneath it stops mattering.
Apply through the Regulatory Collector
The application goes in on WeBOC or PSW, categorised by export share and history, and backed by a security instrument sized to the duty and tax on the input goods involved.
IOCO fixes the input-output ratio
The Input-Output Coefficient Organisation, or the Collector directly where a ratio is already settled for that product, determines how much input one unit of output actually needs, wastage included, and issues an Analysis Certificate before any duty-free import moves.
Input goods come in duty and tax free
Customs duty, sales tax, federal excise duty and withholding tax are not collected at import or local purchase, against the authorisation number entered on the Goods Declaration.
Manufacture and export inside the utilisation period
The input has to go into an output that is actually exported before the utilisation period runs out, tracked against the same PCT codes and ratio IOCO approved.
Reconcile on schedule
A reconciliation statement covering what came in, what went out, what was sold domestically and what was wasted falls due at set intervals. Miss it, and the system stops further imports under that authorisation until it is filed.
What happens if the obligation is not met
Goods missing from the declared premises, retained past the utilisation period, or short of the value addition required, get the bond or bank guarantee encashed, after the user is given a chance to explain. An audit that finds fiscal fraud can see the exporter's CNIC blacklisted from the system.
The figures the rules fix directly
The input-output ratio is settled product by product by IOCO, not fixed in the rules. These figures are, and they have moved before, most recently the utilisation period, extended in 2025.
- Minimum value addition, manufacturer-cum-exporter10%on of export value, in USD terms for imported input and PKR for local input, on an annual aggregate basis · Rule 872(1)(a)
- Domestic sale allowed without extra surchargeUp to 20% of output goodson on payment of duty and tax as if the goods were freshly imported · Rule 886(1)
- Surcharge on domestic sales beyond that limit, or unused input disposed of after the periodKIBOR plus 3% per annumon charged on the value of the input goods involved, in addition to duty and tax · Rule 886(2), 887(1)(c)
- Utilisation period18 monthson extendable by up to a further 6 months on application to a Board, Commerce and Industries committee, for reasons recorded; was 9 months before 7 March 2025 · Rule 883
Checked 14 September 2026 against Federal Board of Revenue — Export Facilitation Scheme Rules 2021 (Customs Rules, 2001, Chapter XL), as amended to 17 June 2026. Rates move at the budget and by SRO in between, so confirm the current figure with us before you price a consignment on it.
Where this shows up most
EFS is a textile scheme before it is anything else. Most of what we have filed it for is fabric, yarn and made-ups going out the door, from companies we have cleared for over the years.
Comfort Knitwears · H. Sheikh Noor-ud-Din & Sons · Z-KAP (Zulfiqar Knitting & Processing Mills) · Fairdeal Textiles · Green Hill Corporation · Stitches · Warisha Industries · Aadam Textile · Al Rehman Textile Industries · Al-Hamza Textile · Luminara Textiles · Unifab Exports · Vihaana Textiles · Bilal Qayyum Embroidery · Pak Thread Collection · Textile Sage
The security instrument is real money tied up, not paperwork. A bank guarantee, or an indemnity bond and post-dated cheque, sized to your duty and tax exposure sits with the Collector for the life of the authorisation, whether or not you ever miss an export obligation. If production is too irregular to carry that comfortably, EFS is not automatically the better route over paying duty at import and claiming it back under drawback, and we will say that before an application goes in, not after the bond is sitting there unused.
Questions
What exporters ask us about EFS
Contact
Tell us what is coming.
Give us the product, the port and roughly when the vessel is due, and we will tell you what the clearance involves and what it will cost.