Lower service tax on economy class to boost air traffic

New Delhi: The introduction of the Goods and Services Tax (GST) is likely to continue to fuel the growth in domestic air traffic although the import of private jets for personal use will become more expensive under the new regime.
Kapil Kaul, Chief Executive Officer and Director, Centre for Asia Pacific Aviation (CAPA), South Asia, termed the Government’s decision to levy a 5 per cent service tax on economy class tickets and 12 per cent on business class tickets as a “very good decision which will continue to support the affordable fare regime in the country.”

CAPA expects the high growth rate in domestic traffic to continue in the near term with further upside once the GST’s impact on the economy is visible in one-two years.
“The new rates in the aviation sector generally seem to follow the Government principle that services for the common man be kept at lower rates. This probably explains why economy class is being pegged at 5 per cent (down from the 6 per cent earlier) and business class tickets at 12 per cent up from 9 per cent,” said Anita Rastogi, Indirect Tax, PwC.
To Read the News in Full 19/05/17 Business Line