Domestic And International Airplane Fares Surprisingly Rise

ISLAMABAD: In accordance with the three tiers of IATA, the government has established new rates for Federal Excise Duty (FED) on business, first, and club class airplane fare based on regions or areas.

On Monday, the government made a few changes to the Finance Supplementary Bill 2023.

The government has made some technical changes to the Income Tax Ordinance 2001 as part of the amended Finance Bill 2023. These changes make it so that the 10% withholding tax on trading shares only applies to shares that are not traded on the stock exchange.

The airplane fares and FED would be applied to first-class, business, and club tickets purchased on or after the start of the Finance (Supplementary) Bill 2023, at the new rates.

The FED will levy a rate of Rs250,000 on the aforementioned tickets from IATA Traffic Conference Area-1 (North, Central, and South America and Environments) under the first slab of the money bill.

The second slab stipulates that the FED will charge Rs75,000 for the aforementioned IATA Traffic Conference Area-2 (Middle East and Africa) tickets. The FED for IATA Traffic Conference Area-2 (Europe) would be Rs150,000.

On those tickets from IATA Traffic Conference Area-3 (Far East, Australia, New Zealand, and Pacific Islands), the FED would charge Rs150,000 under the third slab.

Instead of imposing a 20% tax on international air travel, the Senate has suggested modifications to the Finance (Supplementary) Bill, 2023, which would establish a fixed amount of tax for each destination.

The government increased FED on business, first, and club class air tickets through the Finance Supplementary Bill 2023. On air tickets issued on or after the date of commencement of the Bill 2023, the FED was proposed to be Rs50,000 per ticket or 20% of the gross amount, whichever is higher.

The Federal Board of Revenue (FBR) has corrected a mistake and clarified section 37A of the Income Tax Ordinance 2001 under the amended Bill 2023.

The Bill increased the cross-over fee between Tiers 1 and 2 from PKR 6,660 to PKR 9,000 (Cut-off Price increased from PKR 155 to PKR 212). Tier 1 cigarette excise duty has increased from PKR 130 to PKR 330, from PKR 6,500 to PKR 16,500 per 1,000 cigarettes. Tier 2 cigarette excise duty has increased from PKR 41 to PKR 101, from PKR 2,050 to PKR 5,050 per 1000 cigarettes.

The Minimum Price was raised from PKR 70.12 to PKR 127.44, and no brand shall be sold at a retail price that is less than 60% of the retail price (excluding sales tax). According to the amended bill, 18 percent GST will be added to the price of the printed pack, and Tier 1 brands will remain in Tier 1 regardless of price changes after the amendment.