Understanding How GST Affects Airline Ticket Booking in India
Flying has never been more accessible to travelers in India, with the rapid expansion of the aviation industry in the past few years. Airlines have now made it much easier for people to travel to different destinations across India and the world. However, with the introduction of the Goods and Services Tax (GST) in the country, there has been a lot of confusion regarding its impact on airline ticket booking. In this article, we will examine how GST affects airline ticket booking in India and what travelers need to keep in mind.
Understanding GST
GST is one of the biggest tax reforms in India, which is aimed at simplifying the country’s complex tax system. It is a comprehensive tax levy on the manufacture, sale, and consumption of goods and services. The GST is levied on every stage of the supply chain and is applicable to all businesses in the country, including airlines.
GST on Airline Tickets
The aviation industry is one of the most important sectors in India, contributing significantly to the country’s economy. Since its introduction, GST has impacted the airline industry in several ways. Before the implementation of GST, airlines paid service tax of 6% on economy class and 9% on business class tickets. However, airlines now levy a GST of 5% on both domestic and international economy class tickets and 12% on business class tickets.
Fare structure and input tax credit
Under GST, airline fares are divided into two parts – Basic Fare and Fuel Surcharge. The GST is then applied to the Basic Fare. In case of an economy class ticket, the Basic Fare, along with the GST, is up to Rs. 1,000 and the fuel surcharge is Rs. 150. On the other hand, for a business class ticket, the Basic Fare, along with the GST, is above Rs. 1,000, and the fuel surcharge is Rs. 150.
Airlines can claim input tax credit on their expenses, such as fuel, maintenance, and repairs, which can reduce their input costs. This reduction in input costs can lead to lower fares and better services.
Impact on travelers
The introduction of GST has had a mixed impact on travelers in India. Since airlines can now claim input tax credit, they may be able to reduce fares of economy class tickets and offer better services. However, Business class travelers may have to shell out a little extra as the GST rate is higher for such tickets.
Additionally, the prices of additional services offered by airlines such as meals, seats, and baggage have also been affected by GST. These services now attract a taxed of 5% instead of the earlier 6%.
Conclusion
In conclusion, GST has impacted the airline industry in several ways. While it has led to the reduction of input costs for airlines, travelers have to keep in mind that the frequency and cost of such additional services have been affected by GST. So, it is important for travelers to consider these changes when booking airplane tickets and extra services. With the right information, travelers can make informed decisions and plan their trips accordingly.
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