ISLAMABAD: The government has fixed the new rates of Federal Excise Duty (FED) on air tickets of business, first class, and club class on the basis of regions/areas in line with the three-tiers of IATA.
The government introduced certain amendments to the Finance Supplementary Bill 2023 on Monday.
Under the amended Finance Bill 2023, the government has made some technical amendments to the Income Tax Ordinance 2001 so that the 10 percent withholding tax on trading of shares be applicable on only those shares which are not traded on the stock exchange.
According to the new rates, the FED would be applicable on club, business and first-class air tickets issued on or after the date of commencement of the Finance (Supplementary) Bill 2023.
Big taxation measures taken through money bill
Under the first slab, the rate of the FED would be Rs250,000 on the said tickets of IATA Traffic Conference Area-1 (North, Central, South America and Environs).
As per the second slab, the rate of the FED would be Rs75,000 on the said tickets of IATA Traffic Conference Area-2 (Middle East and Africa). The FED would be Rs150,000 for IATA Traffic Conference Area-2 (Europe).
Under the third slab, the rate of the FED would be Rs150,000 on the said tickets of IATA Traffic Conference Area-3 (Far East, Australia, New Zealand and Pacific Islands).
Senate has made recommendations to the National Assembly for changes in the Finance (Supplementary) Bill, 2023, to fix a definite amount of tax on international air travel for each destination instead of imposing a 20 per cent tax.
Through the Finance Supplementary Bill 2023, the government had increased FED on air tickets of business, first class, and club class. The FED was proposed to be 20 percent of the gross amount of ticket or Rs50,000 per ticket, whichever is higher, on air tickets issued on or after the date of commencement of the Bill 2023.
Under the amended Bill 2023, the Federal Board of Revenue (FBR) has rectified an error and clarified section 37A of the Income Tax Ordinance 2001.
Under the Bill, the cross-over between Tier 1 and Tier 2 increased from PKR 6,660 to PKR 9,000 (Cut-off Price from PKR 155 to PKR 212). There is an increase in cigarette excise duty of Tier 1 – PKR 6,500 to PKR 16,500 per 1,000 cigarettes (From PKR 130 to PKR 330). There is an increase in cigarette excise duty of Tier 2 – PKR 2,050 to PKR 5,050 per 1000 cigarettes (From PKR 41 to PKR 101).
No brand shall be priced and sold at a retail price (excluding sales tax) lower than 60 per cent of the retail price (Minimum Price increased from PKR 70.12 to PKR 127.44). The Tier 1 brands irrespective of price change post amendment shall remain in Tier 1 and 18 percent GST will be applied to the printed pack price, the amended bill added.
Copyright Business Recorder, 2023