The Pakistani government has imposed a fresh round of Federal Excise Tax (FED) on airline tickets. On February 20, the National Assembly accepted the new responsibilities as a part of the revised Finance (Supplementary) Bill 2023, which Minister of Finance Mohammad Ishaq Dar had proposed.
Customers who purchase club , business, or first class tickets are subject to additional obligations. Travellers will pay a different amount in duty depending on where they are going. According to the Pakistan government, travellers must pay four separate duty rates for various destinations. They have divided the various obligations to be paid using the International Air Transport Association’s (IATA) Traffic Conference Zones.
The duties to be paid by the Government of Pakistans utilisation of the IATA Traffic Conference Areas are as follows:
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North, Central, South America and Environs – Rs 250,000
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Middle East and Africa Rs 75,000 Europe – Rs 150,000
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Far East, Australia, New Zealand and Pacific Islands –Rs 150,000
The Finance (Supplementary) Bill 2023 included the duties to improve tax collection for the government and increase tax revenue by Rs 170 billion. The new fiscal policies will obtain $1.1 billion from the International Monetary Fund.
Getting to the point, the FED does not cover clients who book economy class tickets in its current form. The original Finance (Supplementary) Bill 2023, which the Cabinet passed on February 15, included the implementation of a FED on airline tickets.
The Law mandated that travellers travelling in business, first, and club classes would be subject to a tax equal to 20% of the ticket’s value or Rs 50,000, whichever was higher.