Withholding tax cut: FBR recovers Rs 133 million from three domestic airlines

Showing remarkable performance in recovery drive, the Federal Board of Revenue (FBR) has recovered around Rs 133 million from three domestic airlines under the head of withholding tax deductions on domestic air tickets during current fiscal.
Sources told Business Recorder here on Monday that the FBR has directed the field formations to regularly monitor the withholding tax deductions on domestic air tickets to check whether the deducted amount has been deposited in the national exchequer for 2010-2011.
As a result of enforcement action, three domestic airlines have immediately deposited around Rs 133 million into the national exchequer. According to the instructions issued to the field formations, the regional offices must follow up-to-date recovery from the airlines in the remaining months of current fiscal keeping in view of ticketing data of these airlines.
Through Finance Act 2010, a new section 236B has been inserted in the Income Tax Ordinance 2001. The new enactment provides for charge of adjustable withholding income tax on purchase of tickets for inland air travel. This tax would be collected @ 5 percent on gross amount of air ticket for inland travel along with the payment for the air ticket. This advance tax shall be adjustable against the overall tax liability of the purchaser of such air ticket.
This tax shall not be charged on purchase of air ticket by the federal /provincial governments and by a person who produces a certificate of the relevant Commissioner Inland Revenue that income of such person during the tax year is exempt. Tax deducted under this section shall be paid to the relevant Commissioner Inland Revenue as required under the Law.
Tax deducted under this section shall be allowed to be adjusted against the liability of the person whom such ticket for inland air travel is issued. However, in cases where payment is made by the employer/parents of the dependents travellers, such adjustment can be claimed by the employer.
The concerned section 236B of the Income Tax Ordinance 2001 says [236B Advance tax on purchase of air ticket. There shall be collected advance tax at the rate specified in Division IX of Part IV of the First Schedule, on the purchase of gross amount of domestic air ticket. The person preparing air ticket shall charge advance tax under subsection (1) in the manner air ticket charges are charged.