FBR Initiates Crackdown on Benami Transactions in Used Car Imports

The Federal Board of Revenue’s (FBR) anti-Benami zone has launched a large-scale operation targeting illicit transactions worth billions of rupees, involving old/used car importers over the last seven years.

According to an official statement, the anti-Benami unit is cracking down on the misuse of the Vehicle Baggage and Gifts Scheme (VB&GS). This scheme, intended for genuine personal imports, has allegedly been exploited by commercial importers with the assistance of customs officials through clearing agents.

The enforcement is focused on vehicle clearances processed between February 2018 and May 2025. Clearing agents have been given a week to provide detailed justifications for thousands of vehicle imports under the personal baggage scheme.

Authorities have accused clearing agents of concealing the actual beneficiaries of imported vehicles while evading significant taxes and duties over the past seven years.

The anti-Benami zone is seeking comprehensive documentation from clearing agents, including:

  • Complete import records
  • Customs declarations
  • Details of end users and true owners (names, CNIC, addresses)
  • Information on all transaction parties
  • Copies of agreements and contracts
  • Bank statements for the entire seven-year period
  • Explanations of how commercial vehicles qualified for the personal baggage and gifts scheme

The agency has warned that non-compliance will result in criminal proceedings under the Benami Transactions (Prohibition) Act 2017, underscoring the commitment to hold accountable those responsible for scheme exploitation.

Arshad Khurshid, Chairman of the All Pakistan Customs Clearing Agents Association, verified that the anti-Benami zone has sent notices to association members involved in vehicle clearance.

He stated that the association has directed its members to fully cooperate with the investigation and provide all requested clearance records to the authorities.

Sources indicate that the crackdown follows directives from Prime Minister Shahbaz Sharif, who instructed action against the misuse of overseas Pakistanis’ passports for exploiting personal baggage, transfer of residence, and gift schemes in used vehicle imports.

The Prime Minister’s instruction reflects a zero-tolerance stance on the abuse of schemes intended for facilitating legitimate personal imports by overseas Pakistanis.

The government previously attempted to address this issue by introducing additional legal requirements in the Import Policy Order, 2022, implemented in 2019, for used vehicle imports under these schemes.

The regulations stipulated that all duties and taxes for vehicles imported under transfer of residence, personal baggage, or gift schemes must be paid using foreign exchange arranged by Pakistani nationals or local recipients, supported by bank encashment certificates.

Remittances for duty and tax payments must originate from the account of the Pakistani national sending the vehicle from abroad, or a family member’s account if the sender’s account is non-existent or inoperative.

To ensure compliance, submission of Proceed Realization Certificates was made mandatory, including details of remitting banks, remitter names, beneficiary information, account numbers, certificate amounts, and beneficiary banks verified by head offices.

Customs authorities have uncovered a new fraud pattern involving fake Proceed Realization Certificates submitted by those involved in vehicle clearance in collusion with private banks.

These fraudulent certificates were verified by the banks, enabling illegal vehicle clearances. Sources suggest that the current crackdown may lack lasting impact without comprehensive policy reform.

They noted that while the government collected over Rs. 100 billion through used vehicle imports, it lacked a commercial import policy, urging the government to introduce such a policy to eliminate illicit activities.