Based on foreign areas and destinations, the government has established new federal excise tax (FED) rates for first class, business class, and club class airline tickets.
On Monday, the government presented the Finance Supplemental Bill 2023 revisions.
For FED, new slabs
The FED would be applicable on club, business, and first-class flight tickets issued on or after the date of commencement of the Finance (Supplementary) Law 2023, according to the FED’s revised rates.
The rate of the FED on the aforementioned tickets for IATA Traffic Conference Area-1 would be Rs. 250,000 under the first slab (North, Central, South America and environs).
According to the second slab, the FED rate on the aforementioned tickets for IATA Traffic Conference Area-2 would be Rs. 75,000. (Middle East and Africa). The FED for IATA Traffic Conference Area-2 will be Rs. 150,000. (Europe).
The rate of the FED on the aforementioned tickets for IATA Traffic Conference Area-3 would be Rs. 150,000 under the third slab (Far East, Australia, New Zealand and Pacific Islands).
Instead of putting a 20 percent tax on foreign air travel, the Senate recommended to the National Assembly that the Finance (Supplementary) Bill, 2023, be changed to specify a specific amount of tax for each destination.
Previously, the government raised FED on business, first, and club class airline tickets under the Finance Supplemental Bill 2023. The FED was suggested to be equal to the greater of 20 percent of the total ticket sales revenue or Rs. 50,000 per ticket.