Air fares to go up from today

July 01, 2010 12:20 am | Updated 12:20 am IST - New Delhi:

Domestic and international air fares will rise by Rs. 103 and Rs. 515 with a government notification to bring air travel into the service tax ambit. The hike comes into effect from Thursday.

The 2010-11 Budget contained a proposal that a 10 per cent service tax be charged on air travel.

It proposed to include domestic and international journeys in any class among the air transport services to attract service tax. However, airline crew on duty and U.N. staff are exempted from paying the tax.

The notification, by the Department of Revenue over a week ago, said that for domestic travel “10 per cent of the gross value of ticket or Rs. 100 per journey, whichever is less” would be charged and for international journeys, it would be “10 per cent of the gross value of the ticket or Rs. 500 per journey, whichever is less.”

A service tax of a little over 12 per cent on foreign travel by business or first class has been in existence for several years.

Air travellers would be exempted from paying this tax while on a journey originating from or terminating in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura and Bagdogra in West Bengal.

They would also be exempted for journeys from the airports of Srinagar, Leh and Jammu.

The move to impose the tax was opposed by all Indian carriers as well as the global airlines body, the International Air Transport Association, which sought a roll-back, describing it as “unacceptable” and “counter-productive“.

Following this, the government capped the hike at Rs. 100 for all domestic travel and Rs. 500 for economy-class foreign travel, leaving the tax on upper class international journeys as it is.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.