The Federal Board of Revenue (FBR) has recently introduced a new Advance Tax on air ticket purchases through the Finance Supplementary Bill 2023. This tax has been implemented to generate revenue from air travel and is applicable to Pakistani users who are planning to travel by air.
What is the Advance Tax?
The Advance Tax is calculated at a rate of 20% of the total cost of the air ticket. For business class tickets, the tax will be either 20% of the gross amount or a fixed amount of Rs. 50,000, whichever is higher. For example, if you are planning to travel to Sharjah, the total tax amount, including the Federal Excise Duty, will be Rs. 75,000. Similarly, if you are traveling to the USA or Europe, the tax amount will increase by Rs. 250,000 and Rs. 150,000 respectively.
Impact on Travel Costs
Before this new tax, there was no tax on the purchase of economy class tickets, and the rates varied for other classes. For first-class tickets, the tax was Rs. 16,000 per person per ticket, and for other classes, excluding the economy class, it was Rs. 12,000 per person. The taxes collected can be adjusted against the liability of income tax payable, and you can also apply for a refund of the income tax paid against this section.
What You Need to Know
As a Pakistani user, it is important to stay informed about any changes to tax policies in the country. While the FBR hopes to generate around Rs. 170 billion in tax revenue through these indirect taxes, there is concern that such measures could negatively impact the living standards of the working class.
Therefore, if you are planning to travel by air, it is important to factor in the additional tax when budgeting for your trip. This tax may add to the cost of air travel, but by staying informed and planning ahead, you can still enjoy safe and comfortable air travel without any financial surprises.
In conclusion, the new Advance Tax on air ticket purchases in Pakistan is a recent development that has raised concerns among the public. As a Pakistani traveler, it is important to stay informed about any changes to tax policies in the country to avoid any financial surprises. By planning ahead and factoring in the additional tax when budgeting for your trip, you can still enjoy safe and comfortable air travel without any negative impact on your finances.