No additional FED on air tickets issued before July 1

FBR issues clarification
Jul 03, 2022
<p>PHOTO FILE</p>

PHOTO FILE

After Prime Minister Shehbaz Sharif rebuked officials for collecting Federal Exercise Duty (FED) at increased rates even before the start of the new fiscal year, the Federal Board of Revenue has issued a clarification.

The clarification said that FED at new rates could not be collected on the tickets issued before July 1.

Under the Budget 2022-23, the government has jacked up FED on the club, business, and first-class international air tickets from Rs10,000 to Rs50,000.

However, there were reports that authorities began collecting FED before the start of the new fiscal year for journeys scheduled after July 1.

The FBR in a clarification sent to all the airlines operating in Pakistan has said that Federal Exercise Rules 2005 require that FED is “charged and collected at the time of issuing of the international air ticket.”

Hence, the duty on new rates could be charged only when a ticket is issued.

“Therefore, it is clarified that the enhanced rate of federal exercise duty at Rs50,000 (which was previously Rs10,000) is not applicable on the Club, Business, and First class international air tickets that have already been issued before the first day of July, 2022,” the FBR said.

FED on international air tickets is also known as the departure tax.

The government estimate raising Rs3 billion in additional tax by increasing FED rates.

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