Budget 2025-26 Proposes Sales Tax Exemption on Aircraft Inducted by PIA

[Abbas Ali]

Government of Pakistan has announced to introduce General Sales Tax (GST) exemptions on aircraft imports and leasing for PIA as part of efforts to facilitate airline’s privatization process.

The proposed new exemption, outlined in the federal budget 2025-26, removes sales tax obligations for PIA on aircraft imports or lease agreements, providing a significant financial relief measure for the struggling airline.

The exemption extends beyond just aircraft to include a wide range of aviation-related goods and equipment.

The tax relief will cover seven key categories of aviation imports, all receiving zero percent customs duty treatment. These include complete aircraft whether imported or acquired through wet or dry lease arrangements, spare parts for aircraft and simulators, maintenance kits for trainer aircraft, and specialized machinery and equipment for Maintenance, Repair and Overhaul (MRO) operations.

It also encompasses aviation simulators, aircraft engines, and operational tools for new airport facilities.

For PIA specifically, the aircraft import exemption has been backdated to March 19, 2015, potentially providing retroactive benefits for the airline’s fleet acquisitions over the past decade.

Source: https://www.brecorder.com/news/40367112 ... -announced