Domestic and international flights from India will become a little more costly from July 1.From that day, airlines will inflict a 10 per cent service tax on the gross value of the domestic and international air tickets subject to a ceiling of Rs 100 for each domestic and Rs 500 for each international journey in economy class.
Airline officials said that the gross value comprises the base price and fuel surcharge. Passenger security fee and airport charges will not be covered for formative the gross value of the ticket.
A few airports exempted. The service tax will not be valid on passengers undertaking a journey originating or terminating in an airport in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura or Bagdogra airport in West Bengal.
At the moment, a service tax is levied just on first and business class international flights taken from India. Now, there is no service tax on domestic flights.
The decision to levy a service tax on domestic and every section of international flights was declared as part of the Union Budget 2010-11. Meanwhile, some international airlines plan to move toward the Government to seek an exemption from service tax on tickets issued before June 22.
The announcement was issued on June 22 and comes into effect from July 1. It will be complex for airlines to collect the service tax from those passengers who have bought their ticket prior to the notification was issued but will be travelling after its implementation comes into effect, a senior official with a global airline said.
The Government has exempt certain services from the levy of service tax given they are within a port or an airport as well as supply of water, electricity, services provided by fire service agencies, repair of ships or vessels or boats belonging to the Government including Navy, Coast Guards or Customs but not Government owned Public Sector Undertakings and pollution control services.
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