KARACHI: Federal Board of Revenue (FBR) on Monday issued rules to implement income tax rules for collection of five percent advance tax on air ticket on local and international journeys.
To implement the rules the FBR issued SRO 817(I)/2014 under which airlines issuing tickets directly to passengers, either manually or electronically, shall charge and collect advance tax, at five percent under Section 236B and 236L of Income Tax Ordinance, 2001, directly from the passengers and shall be paid to the government.
The FBR explained that the airline means airline issuing tickets for uplifting passengers of any airline, whether having its head office or registered office or an agent in Pakistan or not, if the journey originates in Pakistan. The obligation to charge, collect and deposit tax is in respect of the airline uplifting the passenger in respect of the journey originating in Pakistan.
The FBR said that 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 from such persons shall be paid as per sub-rule (4).
The sub-rule (4) explains that tax collected by the airlines shall be paid by the 15th day of the following second month in respect of tickets issued up to the last working day of each calendar month.
The FBR said that for the month of May and June, the shall be paid by 15th day of June on the basis of average tax paid in respect of July to April. Any short or excess tax paid, in respect of tickets issued during May and June, shall be adjusted in the tax required to be paid by the 15th day of July.
According the SRO, every airline issuing international air tickets shall make adequate arrangements for collection of tax under the rules 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 ordinance.