PAA Confirms Airport Operations Amid India-Pakistan Tensions

The Pakistan Airports Authority (PAA) has confirmed that all airports remain fully operational and the national airspace is secure for civil aviation, despite escalating military tensions with India—a situation with significant tax implications for businesses reliant on aviation. Our tax law firm urges clients to ensure compliance with Federal Board of Revenue (FBR) regulations amid this volatile environment.

The PAA’s statement, issued on May 7, 2025, follows Pakistan’s military downing of five Indian jets in retaliation for India’s missile strikes, which killed 26 civilians, per the text and web sources like Reuters. The PAA has raised concerns with the International Civil Aviation Organisation (ICAO) about India’s reckless actions endangering civil aviation safety, while emphasizing uninterrupted flight operations. The National Security Council (NSC) condemned India’s violation of sovereignty, reserving the right to self-defense, and Prime Minister Shehbaz Sharif highlighted the Pakistan Air Force’s restraint, noting its capability to down 10 Indian aircraft, while rejecting India’s baseless allegations of involvement in the Pahalgam attack, as reported by Al Jazeera.

From a tax law perspective, operational airports ensure aviation revenue, but geopolitical risks may impact customs duties under Section 25 of the Customs Act, especially for cargo flights. Aviation businesses must ensure sales tax compliance at 17% under the Sales Tax Act, 1990, as FBR audits may target disrupted revenue streams, particularly with overflight fee losses noted in Aviation A2Z. Input tax credits under Section 8B could be at risk if flight operations face further interruptions, requiring reconciliation. Travel expense deductions under Section 29 of the Income Tax Ordinance may also face FBR scrutiny amid economic uncertainty.

Critically, the narrative of “secure airspace” may downplay ongoing risks—web sources like NDTV report airspace closures and flight cancellations, while posts on X from @GovtofPakistan reflect Pakistan’s defensive stance, suggesting potential escalation that could disrupt aviation taxes. Clients should prepare for sudden tax adjustments.

Our firm advises clients to review aviation tax filings, ensure customs compliance, and brace for FBR audits, navigating this turbulent fiscal landscape