FBR updates Federal Excise Duty structure for first-class, business-class, and club-class air tickets under the amended Federal Excise Act, 2005.
Pakistan has introduced revised Federal Excise Duty (FED) rates on air travel tickets for the fiscal year 2026-27, with the updated structure now formally incorporated into the Federal Excise Act, 2005, as amended up to June 30, 2026.
The Federal Board of Revenue (FBR) issued a notification outlining the new duty rates applicable to club-class, business-class, and first-class air tickets issued on or after July 1, 2026.
The revised rates are based on the destination’s classification under the International Air Transport Association (IATA) Traffic Conference Areas.
According to the updated schedule, passengers traveling to destinations falling under IATA Traffic Conference Area 1—which includes North America, Central America, South America, and surrounding regions—will be required to pay a Federal Excise Duty of Rs50,000 per eligible ticket.
The government has maintained a higher duty rate for these long-haul destinations due to their premium travel nature.
For destinations covered under IATA Traffic Conference Area 2, the FED structure has been divided into two categories.
Travelers heading to the Middle East and Africa will be charged a duty of Rs25,000 on club, business, and first-class tickets. Meanwhile, passengers flying to European destinations will be subject to a higher FED of Rs40,000 per ticket.
The revised schedule also covers IATA Traffic Conference Area 3, which includes Far East countries, Australia, and New Zealand.
Under the new framework, passengers purchasing premium-class tickets for these destinations will pay a Federal Excise Duty of Rs40,000.
The changes are aimed at enhancing revenue collection from premium international air travel while ensuring alignment with the latest fiscal policies.
Tax experts noted that the updated rates will primarily affect travelers opting for business, club, and first-class services on international routes. Airlines and travel operators have also been directed to implement the revised duty structure on all eligible tickets issued from July 1, 2026, onward.
The FBR shared that the updated provisions are now part of the Federal Excise Act and will remain applicable unless revised through future budgetary measures or statutory notifications.