12/25/2023 0 Comments Tax travel![]() ![]() “If the ticket is bought in Pakistan then the entirety of the tax levied on both tickets will be applicable,” Muhammad Nadeem Sharif, Former Chairman Travel Agents Association of Pakistan (TAAP) tells Profit. In the odd situation that customers might want to pull off a jugaar and only have their flight from Pakistan to a connecting destination as economy, and the remaining journey as business or first class, that is not possible. Randhawa explains to Profit that the FED is applicable only on customers travelling outside of Pakistan, and not internal flights. Different airlines have different terminologies. Randhawa, a Lahore based travel consultant, explained the category to Profit “It is simply business class. The most basic definition of club class is that it is a fare category between economy class, and first class.Īmer J. One of the standout features is the introduction of the ‘club class’ as part of the fare categories which will have the FED levied upon them. In response, the Senator suggested that a specific amount be set for each destination instead of imposing the tax.įurthermore, he suggested that this would serve as an alternative approach to the proposed tax, which the Ministry deemed impractical due to the fluctuating nature of fares. At the meeting, Senator Saleem Mandviwalla informed the Finance Division that the Aviation Ministry had expressed concerns about the proposed 20% tax on Business and First Class tickets, citing the variability of ticket fares. The measure, however, stirred controversy which was brought to light at the meeting of the Senate Standing Committee on Finance and Revenue on February 16. The Bill ordered that a tax equivalent to 20% of the ticket’s fare or Rs 50,000, whichever was higher, be levied on passengers travelling in business class, first class, and club class. The imposition of a FED on airline tickets is originally part of the original Finance (Supplementary) Bill 2023 approved by the Cabinet on February 15. How did the FED on airline tickets come about? According to the constitution, sales tax on services, which replaces Federal excise duty (FED), must be imposed and collected by the provinces or Islamabad on services provided within their respective territories. The scope of the tax on services is limited to the Islamabad Capital Territory. Services provided or rendered in Pakistan.Goods produced in the non-tariff areas, and then brought into the tariff area for sale.Goods produced or manufactured in Pakistan.The purpose of the new fiscal measures is to unlock $1.1 billion from the International Monetary Fund.ĭoes this affect customers travelling in Economy Class?Īddressing the elephant in the room, the FED in its current iteration is not applicable to customers travelling on economy class fares.Ī Federal Excise Duty is a federally administered duty levied on goods and services in Pakistan at varying rates. The duties have been levied as part of the Finance (Supplementary) Bill 2023 to enhance the Government’s tax collection, and enable it to raise Rs 170 billion in tax revenue. ![]() North, Central, South America and Environsįar East, Australia, New Zealand and Pacific Islands The duties to be paid in accordance with the Government of Pakistan’s utilisation of the IATA Traffic Conference Areas are as follows: Traffic Conference Area They have utilised the International Air Transport Association’s (IATA) Traffic Conference Areas to delineate between the different duties that are to be paid. The Government of Pakistan has currently levied four different duty amounts that passengers will have to pay for different destinations. The rate of the duty levied upon passengers will depend on their respective destination. The new duties are applicable to customers who purchase club class, business class, and first class tickets. The new duties were approved by the National Assembly on February 20 as part of the amended Finance (Supplementary) Bill 2023 moved by Minister of Finance, Mohammad Ishaq Dar. LAHORE: The Government of Pakistan has levied a new round of Federal Excise Duty (FED) on airline tickets. ![]()
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