Everything You Need to Know About Airline Tickets and GST

Airline tickets are an essential part of traveling and have become more and more accessible as the travel industry has grown over the years. However, with the implementation of the Goods and Services Tax (GST) in India, the concept of buying airline tickets has undergone some changes. In this blog post, we will take a closer look at some of the key things that you need to know about airline tickets and GST.

Before jumping into the details, let’s understand what GST is. GST is an indirect tax that has replaced various indirect taxes in India such as excise duty, service tax, etc. GST is applied on the supply of goods and services throughout India and has helped to make the taxation process simpler and more effective. Now, let’s discuss some key points about airline tickets and GST.

1. GST on Domestic Flights:

The GST applicable to domestic flights is divided into two components – the first is the Goods and Services Tax (GST) of 5% on the basic fare, and the second is the User Development Fee (UDF), which is levied by the airport operator. The UDF amount varies from airport to airport and is not subject to GST.

2. GST on International Flights:

The GST applicable to international flights is also divided into two components – the first is the GST of 5% on the basic fare, and the second is the Foreign Airline Tax (FAT), which is levied by the Indian government on foreign airlines. The FAT amount varies depending on the distance covered by the flight.

3. Input Tax Credit:

One of the key benefits of GST is Input Tax Credit (ITC). This means that a business can claim credit for the GST paid on the input costs of its goods and services. This can be applied to airlines when they purchase goods or services, including aircraft or fuel. In turn, this can help reduce the cost of airline tickets.

4. GST on Cancellation and Rescheduling:

When you cancel or reschedule your flight, the airline charges a fee for their services. This fee is taxable under GST, which means that you will have to pay a GST of 5% on the cancellation or rescheduling fee charged by the airline.

5. GST Invoicing Requirements:

Under the GST regime, airlines are required to issue invoices that comply with the GST law. These invoices must mention details such as the GST identification number, rate of GST, and the amount of GST paid.

6. Impact on Airline Industry:

The implementation of GST has been a positive step for the airline industry. With the implementation of GST, airlines can now claim ITC on the input costs of their services, which can help reduce the cost of airline tickets. Furthermore, the simplification of the taxation process through GST has made it easier for airlines to comply with the taxation requirements.

In conclusion, it is important to understand the impact of GST on airline tickets. With the implementation of GST, there have been changes in the taxation process for airline tickets, which has resulted in both challenges and opportunities for the airline industry. However, with proper understanding and implementation of the GST policies, the airline industry can definitely benefit from the positive changes brought about by GST.