Govt Slaps Massive FED on Business Class Air Tickets

The government has fixed new rates of federal excise duty (FED) on air tickets for first class, business class, and club class based on international regions/destinations. The government has introduced the amendments in the Finance Supplementary Bill 2023 on Monday. According to the new rates of the FED, 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. Under the first slab, the rate of the FED would be Rs. 250,000 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 Rs. 75,000 on the said tickets of IATA Traffic Conference Area-2 (Middle East and Africa). The FED would be Rs. 150,000 for IATA Traffic Conference Area-2 (Europe). Under the third slab, the rate of the FED would be Rs. 150,000 on the said tickets of IATA Traffic Conference Area-3 (Far East, Australia, New Zealand and Pacific Islands). The Senate 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 percent tax. Earlier, through the Finance Supplementary Bill 2023, the government increased FED on air tickets for business, first class, and club class. The FED was proposed to be 20 percent of the gross amount of tickets or Rs. 50,000 per ticket, whichever is higher.