Premium Class Flight Tickets To Become Costlier?

As per unconfirmed National media reports, the Next-gen GST reforms are likely to make air travel in business class and premium class costlier as the GST could be hiked to 18% along input tax credit (ITC), from the current 12%, including ITC.

The change in prices is likely to become effective once the new GST rules are enforced after Diwali, as promised by Prime Minister Narendra Modi. During the Independence Day celebrations, Modi announced “Double Diwali” gift for Indians, by bringing in sweeping reforms to the GST.

According to sources, the Economy class tickets, both domestic and international, would remain unchanged, currently being charged at 5% GST. The GST on Premium economy, business, and first-class tickets is at 12%, chargeable for both domestic and international flights.

The proposal to hike comes as part of a wider GST rate rationalization exercise. Sources said that the Group of Ministers (GoM) is likely to recommend dismissing the 12% and 28% slabs, and also streamline the structure through item-wise reclassification.

At present, the GST on air tickets is levied at 5% or 12%, with ITC applicable only when the travel is directly tied to business activities such as client meetings, conferences or negotiations with vendors.

The GST Council, in a meeting on September 3-4, would take up discussion on the recommendations. The officials are making all arrangements for the rollout of the new tax rules, soon after approved by the Council.