Domestic and international flights from India will become a little more expensive from July 1.
From that day, airlines will impose 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 every domestic and Rs 500 for every international journey in economy class.
Airline officials said that the gross value includes the base price and fuel surcharge. Passenger security fee and airport charges will not be covered for determining the gross value of the ticket.
Some airports exempted
The service tax will not be applicable 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 only on first and business class international flights taken from India. Currently, there is no service tax on domestic flights.
The decision to levy a service tax on domestic and all sections of international flights was announced as part of the Union Budget 2010-11.
Meanwhile, some international airlines plan to approach the Government to seek an exemption from service tax on tickets issued before June 22.
The notification was issued on June 22 and comes into effect from July 1. It will be difficult for airlines to collect the service tax from those passengers who have purchased their ticket before 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 provided they are within a port or an airport including 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.