Under the GST regime the applicable tax rate on passenger tickets for economy class has been reduced from 6% to 5% (non-creditable for goods). The tax rate for business and first class has been increased from 9% to 12% (with input tax creditable for both goods and services procured by airlines). With regard to the UDAN Scheme, the applicable tax would also be 5% (non-creditable for goods) on the value of the passenger ticket excluding the subsidies provided by the Central Government and the State Governments. Moreover, since the maximum airfare or cap prescribed for the Regional Connectivity Scheme (RCS) seats is inclusive of the applicable GST and the same is reimbursable to the airline operator(s) concerned at actuals from the Regional Connectivity Fund, there would be no impact on fares charged from passengers booked on RCS seats.

This information was given by the Minister of State for Civil Aviation Shri Jayant Sinha in a written reply to a question in the Rajya Sabha today.

GST on airfares: differentiated tax treatment by class with input tax credit available for premium travel and special UDAN/RCS rules. GST differentiates air ticket tax treatment by class: economy class tickets carry a lower, non-creditable GST for goods, while business and first class tickets carry a higher GST with input tax credit available for goods and services procured by airlines. UDAN seats are taxed at the lower non-creditable rate on ticket value excluding government subsidies. RCS maximum fares are inclusive of GST and reimbursed at actuals from the Regional Connectivity Fund, so passenger fares on RCS seats remain unaffected.