New federal excise duty structure applies to domestic and international air passenger travel under amended tax law

ISLAMABAD: The Federal Board of Revenue (FBR) has revised the Federal Excise Duty (FED) rates on air travel services under the updated Federal Excise Act, 2005, amended up to June 30, 2026.

The revised tax structure applies to passenger air travel services within Pakistan as well as international journeys originating from the country, with updated duty rates for different categories of routes and travel classes.

FED rates on domestic air travel

Under the amended Federal Excise Act, air passenger travel services provided within Pakistan’s territorial jurisdiction will attract the following FED rates:

Long routes: Rs1,500 per passenger

Short routes: Rs900 per passenger

However, socio-economic routes defined under Serial No. 9 of Table II of the Third Schedule will continue to receive the applicable treatment prescribed under the law.

The updated provisions also maintain exemptions for routes that were already exempt from duty as of July 1, 2014.

New FED structure for international air tickets

The revised law also outlines FED rates applicable to passengers departing Pakistan on international flights.

For economy and economy plus tickets issued on or after July 1, 2024, the existing duty provisions will continue to apply.

Meanwhile, new FED rates have been introduced for club, business and first-class tickets issued on or after July 1, 2026.

The rates have been categorised according to the International Air Transport Association (IATA) Traffic Conference Areas.

FED rates for premium international travel

IATA Traffic Conference Area 1

 (North, Central and South America and Environs)

Rate of duty: Rs50,000

IATA Traffic Conference Area 2

Middle East and Africa: Rs25,000

Europe: Rs40,000

IATA Traffic Conference Area 3

(Far East, Australia and New Zealand)

Rate of duty: Rs40,000

Impact on air travel costs

The revised FED rates on air travel services are expected to increase ticket costs for certain categories of passengers, particularly those travelling in premium international classes.

The FBR introduced the amendments as part of broader changes to the Federal Excise Act aimed at updating taxation measures, improving compliance and increasing revenue collection.

The new duty structure is expected to influence pricing decisions by airlines and travel operators as the revised tax framework comes into effect.