Understanding GST on Airline Tickets: All You Need to Know

Air travel has become an essential part of modern-day life, with millions of people traveling in and out of the country every day. With such a considerable demand for air travel, various taxes come into play, one of which is the Goods and Services Tax (GST). In this article, we will explore everything there is to know about GST on airline tickets.

What is GST?

GST is a tax levied on the supply of goods and services in India. It replaced multiple indirect taxes levied by the central and state governments and simplified the taxation process. GST is a destination-based tax applicable across all sectors and has helped streamline the taxation process in the country.

Applicability of GST on Airline Tickets

According to the GST Council, airline tickets are taxable under the GST regime. The tickets are liable to GST at two different rates, depending on the class of travel.

For economy class tickets, the GST rate applicable is 5%, whereas for business and first-class tickets, the rate is 12%. The tax is levied on the base fare, fuel surcharge, and any other charges levied by the airline, such as convenience fees, seat selection fees, etc.

Input Tax Credit for Airlines

Airlines are allowed to claim Input Tax Credit (ITC) for the GST paid on their inputs, such as aircraft fuel, spare parts, maintenance services, etc. Airlines can only claim ITC for the GST paid on their inputs and not on the GST paid on the sale of airline tickets.

Impact of GST on Airline Ticket Prices

The impact of GST on airfare depends on various factors, such as the route, airline, and class of travel. Airline carriers have the flexibility to adjust their fares in line with the GST rates, and these fares are subject to constant change based on market trends and demand. Airlines pass on the impact of GST to the end consumer in the form of higher fares, adding to the cost of air travel.

Conclusion

In conclusion, GST on airline tickets is an essential component of all air travel bookings in India. The tax rate varies based on the class of travel, and airlines can claim ITC for tax paid on their inputs. While the impact of GST on airfare is subject to various factors, it is safe to say that air travel has become more expensive due to the introduction of GST. As consumers, it’s essential to understand the components of our airfare and how they are taxed to make informed decisions while booking our flights.