Flying in style isn’t cheap, and business or first-class air travel takes that up a notch. From extra legroom and gourmet meals to lounge access and priority boarding, premium tickets are all about comfort and convenience. But passengers who love the perks of the skies may soon see an extra cost added to their tickets. The government is considering increasing the Goods and Services Tax (GST) on business and premium air travel from 12 per cent with input tax credit (ITC) to 18 per cent with ITC, CNBC-TV18 reported. Economy-class tickets, for both domestic and international travel, will continue to attract a 5 per cent GST rate.
At present, GST on premium economy, business, and first-class tickets is uniformly 12 per cent, applicable across all flights. GST on air tickets generally falls into either the 5 per cent or 12 per cent bracket, with ITC allowed only if travel is directly linked to business purposes such as client meetings, vendor negotiations, or conferences.
GST operates under a four-tier structure of 5 per cent, 12 per cent, 18 per cent, and 28 per cent currently. The Group of Ministers (GoM) on GST is expected to recommend scrapping the 12 per cent and 28 per cent slabs to simplify the tax structure through item-wise reclassification.
While some rates may be reduced, premium-class air travel could see an increase to balance revenue requirements with growth considerations.
The GST Council, chaired by Finance Minister Nirmala Sitharaman, is expected to implement the new GST slabs by September 22, sources told NDTV.
The rollout is likely to coincide with Navratri celebrations. The proposed reforms aim to simplify the GST system into a two-tier structure of 5 per cent and 18 per cent, classifying goods and services as ‘merit’ and ‘standard,’ with a special 40 per cent rate applied to select luxury and sin items.
The GST Council is scheduled to discuss the recommendations at its September 3-4 meeting. Ahead of the deliberations, industry and retail bodies have urged the government to implement any changes promptly so that the upcoming festive season remains unaffected.
