The Union Finance Minister, Shri Pranab Mukherjee, while presenting the Union Budget for 2011-12, has announced that the Service Tax on air travel would be raised by Rs.50 in the case of domestic air travel and Rs.250 on international journeys by economy class.

Shri Mukherjee said that the domestic air travel on higher classes would be taxed at the standard rate of 10 per cent to bring it on par with journeys by higher classes on international air travel.

Service tax on air travel increased, raising domestic and international economy class charges and aligning higher-class domestic rates. The Union Budget increases the service tax on air travel by raising the charge for domestic economy travel and increasing the levy on international economy journeys, while treating higher-class domestic travel at the standard service tax rate to align it with higher-class international travel.