ISLAMABAD: To give relief to the rich/wealthy class, the government has decided to reduce the federal excise duty (FED) of Rs50,000 to Rs30,000 imposed on club, business, and first class international air tickets through the Finance Act, 2022.

Sources told Business Recorder here on Tuesday that the government has reverted a major taxation measure of budget (2022-23) on the wealthy people of the country.

The Cabinet has given approval to the summary of the Revenue Division to drastically reduce the FED on international air travel by Rs20,000. The FED on air tickets was increased from Rs10,000 to Rs50,000 in the 1st budget (2022-23) after approval of the cabinet and the Senate Standing Committee on Finance.

It reliably learnt that an internal investigation is underway in the FBR that who actually initiated this budget proposal of increasing the FED from Rs10,000 to Rs50,000 under the Finance Act, 2022.

However, according to tax experts, it is yet not clear how the tax relief has been granted to the elite class of society despite, repeated claims to the contrary of the government. The FBR, recently clarified that the enhanced rate of the FED of Rs50,000 would not be applicable on club, business and first class international air tickets issued before July 1, 2022.

Air travel FED not applicable on tickets issued before July 1: FBR

The FBR has stated that the FED is chargeable on club, business and first class international air tickets under Section 3 of the Federal Excise Act, 2005.

Furthermore, sub-rule (8) of Rule 41A stipulates that the FED is chargeable at the time of issuance of air tickets.

Thus, the enhanced rate of the FED on air tickets under the new Finance Bill 2022 will be chargeable only on international tickets (club, business and first class) issued on and after 1st July 2022.

The FBR has further clarified that as the FED is chargeable at the time of issuance of air tickets; therefore, the enhanced rate of FED at Rs50,000 (previously Rs10,000) is not applicable on the club, business, and first class international air tickets already issued before 1st July2022.

Copyright Business Recorder, 2022