The Federal Board of Revenue (FBR) has made it mandatory for the airlines, issuing international air tickets, to make adequate arrangements for collection of advance tax from the persons issuing tickets on its behalf or through electronic means under section 236L of the Income Tax Ordinance, 2001. The FBR on Friday proposed amendments to the Income Tax Rules 2002 through an SRO.698(I)/2014 on the advance tax on airlines.
Through these rules, the FBR has specified that every airline issuing international air tickets shall make adequate arrangements for collection of tax under the rule from the persons issuing tickets on its behalf or through electronic means and in case of default, the said tax shall be collected from the airline, without prejudice to any other liability which it may incur under the Income Tax Ordinance, 2001.
The advance tax (provision of section 236L) on international air tickets would not be applicable in case of a foreign diplomat or a diplomatic mission in Pakistan, the rules said. Under the rules, the airlines issuing tickets directly to passengers, either manually or electronically, shall charge and collect advance tax, at the rates applicable for sections 236B and 236L, directly from the passengers and shall be paid within the time as prescribed in rule (43).
Where the tickets are issued by persons, other than the Airlines, and the persons issuing tickets on behalf of the airlines, are charging and collecting advance tax from the passengers and making payment of tax to the Airlines directly, or through IATA, or through any other entity authorized in that behalf, the tax so collected by the airlines form such persons shall be paid as per relevant sub-rule.
Tax collected by the airlines under sub-rule (3),shall be paid within seven days from the date when the tax from persons mentioned in sub-rule (3) is received, but not later than one month from the date when such tax was collected from the passengers, it added. Notwithstanding anything contained in Second Schedule to these Rules, monthly and annual statement of tax collected under section 236B and 236L shall be submitted by every airline to the respective Commissioner Inland Revenue, in the following Form and verified in the manner as indicated therein, the rules added.