The Centre is weighing a proposal to increase the Goods and Services Tax (GST) on business and premium class air travel from the existing 12% with input tax credit (ITC) to 18% with ITC, CNBC-TV18 reported
citing sources.
Currently, economy-class tickets—both domestic and international—attract a 5% GST, while premium economy, business, and first-class tickets are taxed at 12%. Input tax credit is permitted only if the travel is tied to business activities such as conferences, client meetings, or vendor engagements.
The proposal is part of a broader GST rationalisation exercise, where the Group of Ministers (GoM) is expected to recommend scrapping the 12% and 28% tax slabs and introducing a simplified structure through item-wise reclassification.
According to the report, while certain items could see rate cuts, premium air travel may face a higher GST levy to balance growth and revenue considerations.
Additionally, reports also stated that there are recommendations to slash the GST on beauty and wellness services from 18% to 5% without input tax credit (ITC), and to reduce the tax on cinema tickets priced below Rs 100 from 12% to 5% with ITC benefits.
The GST Council is set to take up the recommendations at its meeting on September 3–4.
Prime Minister Narendra Modi recently called the upcoming GST reforms a “Diwali bonanza,” with officials indicating that the new framework could be rolled out immediately once approved.
