Karachi, August 7, 2024 – The Federal Board of Revenue (FBR) has announced a reduction in the Federal Excise Duty (FED) on air tickets for passengers holding labour visas. Effective immediately, the FED on such tickets will be reduced to a fixed rate of Rs 5,000 per ticket, a substantial relief for those embarking on international journeys from Pakistan to Gulf Cooperation Council (GCC) countries.
The announcement came through the issuance of SRO 1191(I)/2024 by the FBR, outlining the specifics of the revised duty structure. According to the notification, the reduced FED will apply to passengers whose passports bear a labour visa duly verified by the Protector of Emigrants under the Bureau of Emigration and Overseas Employment. This move is anticipated to benefit a large segment of Pakistani workers employed in the GCC region, who frequently travel between Pakistan and their host countries.
High FED Rates Introduced Earlier
This relief measure follows the introduction of significantly higher FED rates on international air tickets through the Finance Act, 2024. The revised FED rates, which came into effect from July 1, 2024, were seen as burdensome, particularly for those traveling for employment purposes. The FED rates introduced for various categories of international air tickets were as follows:
• Club, Business, and First-Class Air Tickets:
o IATA Traffic Conference Area 1 (including North, Central, South America, and surrounding areas): Rs 350,000
o IATA Traffic Conference Area 2:
Middle East and Africa: Rs 105,000
Europe: Rs 210,000
o IATA Traffic Conference Area 3 (including Far East, Australia, New Zealand, and Pacific Islands): Rs 210,000
The substantial FED rates had sparked concerns among frequent travelers, especially those traveling for employment in the Middle East, where the cost of travel is a significant factor in their financial planning. The reduction to Rs 5,000 per ticket for labour visa holders is expected to alleviate some of these concerns.
Positive Impact on Overseas Pakistanis
The reduction in FED is seen as a strategic move to support overseas Pakistanis, particularly those working in the GCC countries. This demographic constitutes a significant portion of Pakistan’s labour force abroad and plays a crucial role in the country’s economy through remittances. By lowering the cost of air travel, the FBR aims to provide financial relief to these workers, acknowledging their contribution to the national economy.
The initiative has been welcomed by various stakeholders, including representatives from the Bureau of Emigration and Overseas Employment. They highlighted that the move would not only reduce travel costs but also encourage more Pakistani workers to seek employment opportunities abroad, further boosting remittance inflows.
Implementation and Verification
To ensure the benefit is exclusively available to eligible passengers, the FBR has stipulated that the labour visa must be printed on the passport and verified by the Protector of Emigrants. This verification process is crucial to prevent any misuse of the reduced FED rate and ensure that it reaches the intended beneficiaries.
The reduced FED on air tickets is expected to have a positive ripple effect on the economy. By making international travel more affordable for labour visa holders, it is anticipated that more workers will be able to travel back and forth, maintaining their employment and continuing to support their families through remittances.
