Everything You Need to Know About Airline Tickets and GST
Airline travel provides a convenient way to explore the world, but it comes with a cost. One of the major components of this cost is the Goods and Services Tax (GST) levied on airline tickets. In this article, we will explore everything you need to know about airline tickets and GST.
What is GST?
GST is a comprehensive tax levied on goods and services consumed in India. It has replaced multiple indirect taxes such as Excise Duty, Service Tax, and Value Added Tax (VAT). The GST Council, which is chaired by the Union Finance Minister and comprised of the finance ministers of all the states and union territories, decides the tax rates for different goods and services.
How is GST calculated on airline tickets?
The GST rate on economy class airline tickets is 5%, while it’s 12% on business and first-class tickets. This tax is calculated on the base fare plus any additional charges such as fuel surcharge, airport taxes, and airline fees. However, GST is not levied on the User Development Fee (UDF) or the Passenger Service Fee (PSF) charged by airports.
For example, if the base fare of an economy class ticket is Rs. 5,000, and the fuel surcharge and airport taxes amount to Rs. 1,500, the total fare will be Rs. 6,500. The GST charged on this will be 5% of Rs. 6,500, which is Rs. 325.
Who pays GST on airline tickets?
GST is applicable to all passengers travelling on domestic and international flights departing from India. However, the tax is not levied on passengers travelling on duty-free or complimentary tickets.
Can you claim GST input credit on airline tickets?
If you are a registered business and have purchased airline tickets for your employees or clients, you can claim input tax credit on the GST paid on these tickets. This credit can be used to offset your GST liability on other goods and services supplied by your business.
However, if you have purchased tickets for personal travel or are a non-registered business, you cannot claim GST input credit.
What are the other taxes and charges on airline tickets?
Apart from GST, there are other taxes and charges that may be added to your airline ticket fare. These include:
– UDF and PSF charged by airports: These fees are used to fund airport infrastructure and maintenance. UDF is charged on departures from some airports, while PSF is charged on all flights.
– Fuel surcharge: This charge is added to your ticket fare to cover the cost of fuel used by the airline.
– Service fee: Some airlines may charge a service fee for certain services such as seat selection, baggage allowance, and in-flight meals.
– Cancellation fee: If you cancel your flight, the airline may charge a fee for the cancellation.
Conclusion
GST is an essential component of the airline ticket cost. Knowing how it is calculated and levied can help you understand the final fare of your ticket and plan your budget accordingly. Always check the fare breakup before booking your ticket to avoid any surprises. Moreover, if you are a registered business, claiming input tax credit on the GST paid on airline tickets can help you save costs. Keep these points in mind, and happy travels!
