India to Impose Service Tax on Plane Tickets in July

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Jun. 28 – India will soon impose a 10 percent service tax on local and international airfares of Rs. 100 and Rs. 500 respectively whichever is less beginning July 1.

According to the Department of Revenue, 10 percent of the gross value of the ticket or Rs. 100 per journey, whichever is less will be imposed on all local flights. Similarly, international flights in economy class will be charged a service tax worth 10 percent of the gross value of the ticket or Rs. 500, whichever is less.

The move is based on an earlier government decision to charge a 10 percent service tax to raise yearly revenues of Rs. 6 billion and Rs. 10 billion.

The service tax proposal in the 2010-11 Budget was met with disapproval by industry players in the country and international airlines group, International Air Transport Association which referred to the service tax as counter-productive.