India reduces GST on air travel by 1pc in Economy class from July 1

A Monitor Desk Report 22 May, 2017 | 1538 Views|-+
New Delhi: Indian government has decided to reduce GST on conomy class air travel by 1 pc, with effect from July 1, 2017 . Passengers will now pay 5 pc GST, instead of 6pc paid earlier.

However, for those travelling business class, tickets will become dearer as the tax will go up from current 9 per cent to 12 per cent.

Industry experts say that this announcement is in line with the government’s aim to make air travel affordable for the general public.

“Government’s decision to levy 5 per cent and 12 per cent tax for economy and business class is a very good decision which will continue to support affordable fare regime in India. The government was sensitive to the impact of higher GST slab on industry and the consumer is significantly positive,” according to Sydney-based aviation think-tank CAPA Centre of Aviation.

CAPA also said that this is likely to further boost domestic airline traffic, where India is at the third spot.

India’s domestic air passenger traffic stood at 100 million in 2016 and was behind only to the US (719 million) and China (436 million).

“Expect high growth rate in domestic traffic to continue in the near-term with further upside once the GST impact on the economy is visible in 1-2 years,” it added.

A reason for keeping GST on passenger travel low is because airlines cannot claim credit on aviation turbine fuel under the GST regime.

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