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Govt Slaps Massive FED on Business Class Air Tickets

Based on foreign areas and destinations, the government has established new federal excise duty (FED) rates for first class, business class, and club class airline tickets. On Monday, the administration introduced the changes to the Finance Supplemental Bill 2023.

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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, according to the FED’s new rates.

  • The rate of the FED on the aforementioned tickets for IATA Traffic Conference Area-1 would be Rs. 250,000 under the first slab (North, Central, South America and environs). 
  • According to the second slab, the FED rate on the aforementioned tickets for IATA Traffic Conference Area-2 would be Rs. 75,000. (Middle East and Africa). The FED for IATA Traffic Conference Area-2 would be Rs. 150,000. (Europe). 
  • The rate of the FED on the aforementioned tickets for IATA Traffic Conference Area-3 would be Rs. 150,000 under the third slab (Far East, Australia, New Zealand and Pacific Islands).

Instead of putting a 20 percent tax on international air travel, the Senate recommended to the National Assembly that the Finance (Supplementary) Bill, 2023, be changed to specify a specific amount of tax for each destination.

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Earlier, the government raised FED on business, first, and club class airline tickets under the Finance Supplemental Bill 2023. The FED was suggested to be equal to the higher of 20 percent of the total ticket sales revenue or Rs. 50,000 per ticket.

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