As per the CNBC TV18 report, the Central government has proposed increasing GST on business and premium class air tickets from 12% to 18% with input tax credit (ITC). The proposal is set to be discussed at the upcoming GST Council meeting, with the aim of rationalising slab structures and boosting tax revenues.
According to the report, the Centre is considering a rate hike from 12% to 18% GST on tickets for premium economy, business, and first-class travel, both on domestic and international flights. The input tax credit (ITC) mechanism would continue to apply for these ticket categories. This proposed hike forms part of a broader GST rationalisation drive that seeks to simplify tax slabs and eliminate the middle 12% and highest 28% categories.
The GST on economy-class tickets remains unchanged at 5%, offering continued affordability for budget air travellers. This rate also applies to domestic and international sectors. By maintaining this low tax bracket, the government aims to protect the middle-income segment while focusing on adjusting rates applicable to premium segments.
The Group of Ministers on GST has been working on restructuring the tax structure with an item-wise reclassification. The intention is to simplify compliance, reduce disputes, and optimise tax collection. The proposal to adjust the GST on premium air travel helps compensate for potential rate reductions in other sectors within the revised slabs.
Read More: GST Council Likely to Roll Out New Slabs Around September 22, 2025!
The GST Council is scheduled to meet on September 3-4,2025, to review and decide on the proposed changes. Industry stakeholders, including airlines and travel operators, are keen on early implementation to minimise disruptions during the festive season. Sources suggest that backend IT systems are already prepared for a quick rollout post-approval.
The proposal to raise GST on premium class travel to 18% with ITC reflects a strategic move by the Centre as part of its tax slab rationalisation agenda. If approved, the change is likely to impact premium flyers without affecting economy-class travellers.
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Published on: Aug 29, 2025, 1:35 PM IST
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