John Orobulu opened the scoring in the 25th minute to give Ba a 1-nil lead heading into half-time.
However, Labasa fought back in the second half, with Christopher Wasasala finding the equaliser in the 59th minute to bring the scores level at 1-all.
Neither side could find a winner during regulation time, forcing the match into an additional 30 minutes of extra time.
With the scores remaining level, the semi-final was decided by a penalty shootout, where Ba held their nerve to secure a 4-2 victory.
Ba coach Ravinesh Kumar has described the semi-final against Labasa as a tough encounter for both teams, praising the Northern side for their performance despite missing several players.
Kumar says the team would now focus on recovery ahead of tomorrow’s final.
He also thanked Ba’s supporters, saying their prayers, messages and blessings had provided the team with strength throughout the semi-final.
Meanwhile, Vantex Solutions Navua FC booked their place in the final after defeating defending champions Stratum/Lincoln Rewa FC 4-1 on penalties.
The semi-final remained goalless throughout regulation time and extra time, with neither team able to break the deadlock.
Navua proved more clinical from the penalty spot, securing a 4-1 victory to end Rewa's hopes of retaining the Super Premier Division title.
The 86th FMF IDC tournament will conclude tomorrow, with three finals scheduled across the different divisions.
In the Senior Division, Shah Group of Companies Dreketi FC will take on Bua FC at 9.30am.
The Premier Division final will see Seaqaqa FC face the Kiribati national football team at 12pm.
The tournament will conclude with the highly anticipated FMF IDC Super Premier Division final between Ba and Navua at 3pm at the HFC Bank Stadium.
