Karachi, December 13, 2023 – The Federal Board of Revenue (FBR) has issued updated rules for the collection of advance tax on the sale of air tickets during the tax year 2024.
These rules, outlined in the Income Tax Rules, 2002, specifically fall under Rule 43A, signaling a significant development in the taxation framework related to the aviation industry.
Rule 43A, as stated in the updated Income Tax Rules, 2002, applies to sections 236B and 236L of the Income Tax Ordinance, 2001. The rule outlines the procedures for the collection of advance tax by airlines directly from passengers, whether manually or electronically, and establishes clear timelines and guidelines for compliance.
Under sub-rule (2) of Rule 43A, airlines issuing tickets directly to passengers are mandated to charge and collect advance tax at rates applicable to sections 236B and 236L. This tax must be paid within the prescribed timeframe as specified in sub-rule (4). The rule also defines the term “airline” to encompass entities issuing tickets for uplifting passengers of any airline, regardless of its location, if the journey originates in Pakistan.
Sub-rule (3) addresses scenarios where tickets are issued by persons other than the airlines, and these individuals or entities charge and collect advance tax from passengers. In such cases, the tax collected by the airlines from these persons must be paid according to the stipulations in sub-rule (4).
The timeline for tax payment, as detailed in sub-rule (4), requires airlines to pay the tax collected by the 15th day of the following second month for tickets issued up to the last working day of each calendar month. The provision includes specific arrangements for the months of May and June, with adjustments allowed for any short or excess tax paid during these months.
Furthermore, sub-rule (5) emphasizes that airlines issuing international air tickets must establish adequate arrangements for tax collection from persons issuing tickets on their behalf or through electronic means. Failure to comply may result in the airline itself being held liable for the tax.
Monthly and annual statements of tax collected under sections 236B and 236L must be submitted by every airline to the respective Commissioner Inland Revenue, as per sub-rule (6). Monthly statements for tax deposited by the 15th of each month, as outlined in sub-rule (4), are required to be filed by the 21st of the month, with specific provisions for the month of September.
These updated rules aim to streamline the tax collection process related to air tickets, ensuring transparency, accountability, and timely compliance within the aviation sector. The FBR’s initiative seeks to enhance the efficiency of tax collection mechanisms and promote fiscal responsibility within the industry.
