The government is cracking down hard on traders and exporters who have been trying to avoid paying proper customs tariffs through fraudulent acts. If they're caught intentionally cheating, they could face cash penalties up to 200 percent. The new changes have been made in line with the rules of the World Trade Organization. The new Customs Act 2025, which the President approved a few months back, came into effect last Saturday. Given a high number of traders cheating on paying proper customs tariffs, many say that the new law should have come quite early. The law aims at stopping rampant revenue loss caused by undervaluation of goods, using fake papers, or abusing tax breaks. Traders who try to get away with fake documents or changing details to get tax money will now face big penalties, maybe even a jail term, from half a year to a year, or both. Exporters who misinform about the quality or amount of goods will have to pay penalties that equal the complete value of the goods. Authorities can also confiscate the cargo items. With the new law, the government appears serious about revenue leakage. Earlier, the penalty was only 50 percent, but now it has been raised to 200 percent. Meanwhile, government officials who are guilty will face fines from Rs 10,000 to Rs 50,000, or up to a year in jail. Meanwhile, the new law has added a fourth customs lane called the blue lane to the existing green, red, and yellow lanes. Trusted traders in the green lane clear goods without checks, the red lane reviews documents only, and the yellow lane checks both goods and paperwork. The new blue lane brings post-clearance audits, so shipments can still be reviewed after release.
Customs fraud has been eating away government revenues because traders undervalue goods, call goods by the wrong names, and take improper advantage of tax breaks. By imposing the new law, the government has declared that it was high time that it took action against intentional dishonesty. Traders who used to get away with not paying what they owed by using loopholes now have to worry about high penalties and legal issues. The provision of post-clearance checks adds extra responsibility to traders. Many traders and customs clearing agents have not welcomed the new provisions. They are upset with the big penalty provision and have said even small mess-ups could lead to fines. Customs agents across the nation protested the new law by organizing a pen-down strike on Tuesday.
However, these protests shouldn't distract authorities from acting to stop widespread fraud. The government needs to make sure the new rules are implemented effectively and should offer support to customs offices and traders so they can get used to the new provisions. If the government wants to generate more revenues from customs, it could pair tough penalties with technology such as online checks of import documents and live cargo tracking. Making things easier for honest traders, encouraging people to report issues themselves, and doing routine checks after clearance can help honest businesses do well while those who cheat get hit hard. If the government sticks to this plan and is fair about it, they could seriously cut down on lost revenue. For a country that depends on cross-border trade to keep the economy going, this new law ensures that the government has enough revenues, that everyone plays fair, and that avoidance of tax doesn’t pay off.