Economy class air travel set to become cheaper from July 1; Govt fixes tax rate at 5%
The economy class air travel in airlines is set to become cheaper while the business class will become dearer with the implementation of GST from July 1 as the government has lowered the tax rate on air fares of economy class while it has increased the tax rate on air fares of business class.
Economy class air travel will become cheaper with tax rate fixed at 5% against the existing 6%, under the upcoming goods and services tax (GST) regime from July 1.
However, for those travelling business class, tickets will become dearer as the tax will go up from 9% to 12%.
Industry experts say that today's announcement is in line with the government's aim to make flying affordable for the masses.
"Government's decision to levy 5% and 12% tax for economy and business class is a very good decision which will continue to support affordable fare regime in India. The government was sensitive to the impact of higher GST slab on industry and the consumer is significantly positive," according to Sydney-based aviation think-tank CAPA Centre of Aviation.
The GST Council finalised four tax rates of 5, 12, 18 and 28% to apply on services including telecom, insurance, hotels and restaurants.
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