A row between the Federal Board of Revenue (FBR) and international airlines on Federal Excise Duty (FED) collection has ended after the latter started collecting FED difference from travellers, who booked tickets before July 1, 2014, at airports, it is learnt on Tuesday. According to sources, federal government has increased FED on international air travel in budget 2014-15. The levy on economy class has been raised to Rs 5,000 from Rs 3,840 while Rs 10,000 from Rs 6,840 on business class ticket.
Sources said after this development, all international airlines were required to collect FED from passengers embarking from Pakistan to any international destination from July 1, 2014. However, instead of collecting FED from all international travellers, airlines had expressed reluctance to collect the said levy on the tickets issued before July 1, 2014 for the travel after the date of effect.
Sources said earlier, airlines were of the view that enhanced rates of FED would not be applicable to the tickets issued before July 1, 2014 for the travel after the date of effect. However, the tax office not only rejected the view but told the airlines in clear terms that FED is applicable with effect from July 1, 2014 in respect of the passengers embarking on international travel on or after July 1, 2014, irrespective of the date of issuance of the tickets, sources said.
Moreover, sources said after formal deliberations with the airlines, the issue had now been resolved as airlines had now started collecting FED difference from all international passengers prior to the issuance of boarding cards at airports. They further said the issue related to the recovery of FED, which was not collected by the airlines from passengers during initial days of current month, was presently under discussion.
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