India imposes new air ticket tax

2 Jul 2010

The Indian government began yesterday charging a new service tax of 10.3 percent on the gross value of tickets for all classes on domestic flights and Economy class on international flights originating from India.

All domestic travellers now have to pay a service tax of 10.3 percent on the gross value of the ticket or INR103 (US$2.21), whichever is lower.

All international Economy class travellers have to pay as well a service tax of 10.3 percent on the gross value of the ticket or INR515 (US$11.05), whichever is less.

Only the base price, fuel charge and congestion fee make up the gross value of the ticket. The passenger service fee and airport charges are not covered.

Previously, only First and Business class passengers had to pay a service tax, which is also 10.3 percent of the gross value of tickets.

The new directive from the Ministry of Finance applies to tickets sold, issued and re-issued from July 1, 2010.

Airline officials, however, remain unclear whether the circular includes tickets for domestic travel issued overseas (such as a Mumbai-Bangalore-Mumbai routing). “In the absence of clarity we are charging this for tickets issued overseas as well,” Bharat Madevan, Jet Airways regional manager, North Asia, told Business Traveller.

Exemptions to this latest levy are airline crew travelling on duty and United Nations staff. It also includes those embarking on journeys originating or terminating in an airport located in the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Bagdogra in West Bengal.

Payment of service tax will also be exempted for journeys originating in the state of Jammu and Kashmir from the airports of Srinagar, Leh and Jammu.

Margie T Logarta?

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