FBR issues withholding tax rate on purchase of air tickets for tax year 2019/2020

KARACHI: Federal Board of Revenue (FBR) has issued adjustable withholding tax rate on purchase of international air ticket effective for Tax Year 2019/2020.

The FBR said that airlines issuing the air tickets shall collect withholding tax under Section 236L of Income Tax Ordinance, 2001 from the purchasers of international air travel ticket at the time of realization of sale proceeds.

The rate of advance tax on purchase of international air ticket:

(i) First/ Executive class: Rs16,000 per person

(ii) Others excluding Economy: Rs12,000 per person

(iii) Economy: no tax.

The FBR said that as per Finance Act, 2019, the provisions of newly inserted 10th schedule of the Income Tax Ordinance, 2001 shall not apply on tax collected under section 236L.

As per the Tenth Schedule of the Ordinance, the person not appearing on the ATL shall pay 100 percent enhanced withholding tax on making transactions.

The FBR said that on purchase of domestic air ticket under Section 236B the advance tax shall be 5 percent of gross amount of ticket.

The adjustable advance tax shall be collected by person preparing air ticket from purchaser of domestic air travel ticket at the time of realization of sale proceeds.

The FBR said that as per Finance Act, 2019, the provisions of newly inserted 10th schedule of the Income Tax Ordinance, 2001 shall not apply on tax collected under section 236B.

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