Govt proposes major FED cut on business class international tickets

The federal government has proposed a reduction in Federal Excise Duty (FED) on business class international air travel through the Finance Bill 2026-27.

Under the proposed changes, FED on business class tickets for North, Central and South America will be reduced to Rs50,000 from Rs350,000.

For travel to the Middle East and Africa, the duty has been proposed at Rs25,000, down from Rs105,000.

Business class tickets to Europe will be subject to FED of Rs40,000 instead of Rs210,000.

The same rate will apply to travel to the Far East and Australia, where the duty has also been reduced to Rs40,000 from Rs210,000.

The proposed changes will take effect after approval of the Finance Bill 2026-27 by parliament.