How to fly Business-class for Economy’s price

The date of filing of tax returns is extended to 31 October 2017 just like last year and years before that. There are many who have not filed their tax returns yet. So those travelers can save some amount by getting a tax rebate on their travels during the tax period 2016-2017.

According to FBR, 5% advance tax is added to your domestic tickets and fixed amount of upto Rs. 16,000 on international tickets which you can claim as rebate or get adjusted against your tax. This amount might be small for many but hey, at least you’re getting something back from Government – grab the opportunity.

For Domestic Tickets

According to updated section 236B of Income Tax Ordinance, 2001:

Sub-Section (1): There shall be collected advance tax at the rate of 5 percent, on the purchase of gross amount of domestic air ticket:

Provided that this section shall not apply to routes of Baluchistan coastal belt, Azad Jammu and Kashmir, Federally Administered Tribal Areas, Gilgit-Baltistan and Chitral.

Sub-Section (2): The airline issuing air ticket shall charge advance tax under sub-section (1) in the manner air ticket charges are charged.

Sub-Section (2A): The mode, manner and time of collection shall be as may be prescribed.

Sub-Section (3): The advance tax collected under sub-section (1) shall be adjustable.
For International Tickets:

Advance tax on purchase of international air ticket Under Section 236L of Income Tax Ordinance, 2001:

Sub-Section (1): Every airline, issuing ticket for journey originating from Pakistan, shall collect advance tax at the rates specified in Division XX of Part IV of the First Schedule, on the gross amount of international air tickets issued to passengers booking one-way or return, from Pakistan.

Sub-Section (2): The airline issuing air ticket shall collect or charge advance tax under sub-section (1) in the manner air ticket charges are collected or charged, either manually or electronically.

Sub-Section (3): The mode, manner and time of collection under sub-section (1) and time of collection shall be as may be prescribed.

Sub-Section (4): The advance tax collected under sub-section (1) shall be adjustable.

Division XX of Part IV of the First Schedule

S.No.  No.                          Type of Ticket Rate
(1)    (2)                          (3)
1.     First/Executive Class        Rs. 16,000 per person
2.     Others excluding Economy     Rs. 12,000 per person
3.     Economy                      0

So, there is a little something for those who are flying International Executive Economy, Business and First class. A whole new reason for you to fly Business class.

Where to find this tax

For domestic and international tickets this tax would appear in your tickets as “PB” (Pakistan Advance Tax (PB).

Examples
  1. Imagine flying Executive Economy from Islamabad to Dubai for under Rs. 30,000 roundtrip after getting a rebate of Rs. 12,000, this would mean a higher class of service for less than the price of economy.
  2. Islamabad to Kuala Lumpur roundtrip ticket in Business-class costs around Rs. 70,000; after getting advance tax back this ticket would cost you for Rs. 58,000 in luxury.
  3. PIA’s latest Bangkok route KHI-BKK-KHI in business-class is for Rs. 52,000 which is already cheaper than what an economy class ticket in Thai airways would cost. Get Rs. 12,000 back and this would be around Rs. 40,000.
How to get rebate

During return-filing you have to put the advance tax amount in “Domestic Air Ticket Charges u/s 236B”¬†for domestic and in “Purchase of International Air Ticket u/s 236L” for International tickets under “Adjustable Tax” on FBR’s IRIS portal.

Salaried individuals can get this benefit straightaway in next month’s salary after showing the ticket receipt to their accounts department. This advance tax amount will be adjusted in their next month’s salary.

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