GST on Flight Tickets: What Travel Managers and Businesses Need to Know
The introduction of the Goods and Services Tax (GST) in 2017 marked a pivotal moment in India’s tax reform history. It replaced the complicated web of state and central taxes with a single, unified system. One notable change was the impact of GST on flight tickets, which significantly influenced business travel and the tourism industry.
Understanding how GST applies to air travel is crucial for organizations that manage frequent business trips. It affects not only travel expenses but also the potential for cost recovery through Input Tax Credit (ITC).
What is GST on flight tickets?
Under GST, all domestic and international air tickets sold in India are subject to tax. Airlines must collect GST at the point of sale, depending on the class of travel and type of flight.
Typical GST rates for air travel:
- Economy Class: 5%
- Business Class/Premium Class: 12%
- Chartered Flights: 12%
In case of flight cancellations, GST is also applied to cancellation fees at the same applicable rate as the original booking.
Exemptions and Special Rates
As of July 18, 2022, certain exemptions apply:
- No GST on economy class air tickets to/from:
- Bagdogra (West Bengal)
- All northeastern states (Assam, Sikkim, Arunachal Pradesh, Manipur, Mizoram, Nagaland, Tripura, Meghalaya)
Previously, Value-Added Tax (VAT) was imposed at 8.4% for business class and 5.6% for economy class tickets, so the GST regime has, in many cases, lowered the overall tax burden on air travel.
GST Applicability: Domestic vs. International Flights
- Domestic flights: GST is always applicable if the point of sale is in India.
- International flights: Considered zero-rated under GST, meaning no GST is charged on the ticket fare. However, ancillary services like insurance or ground transportation may still be taxable under GST, depending on the service.
Input Tax Credit (ITC) on Flight Tickets
Business travel often makes up a significant portion of an organization’s controllable expenses. The Input Tax Credit allows companies to reclaim GST paid on air tickets used for official business purposes.
To claim ITC, companies must:
- Be GST-registered
- Provide their GSTIN, business name, and contact information during the booking
- Ensure that the air travel is for business purposes only (not personal travel)
Key Conditions:
- ITC is not available for personal travel.
- IGST applies if the company and airline are in different GST-registered states.
- A GST invoice must be issued by the airline.
How to Get a GST Invoice for Flight Tickets
To claim ITC, businesses must obtain a proper GST invoice from the airline or travel agency. The invoice should contain
- Registered business name
- Correct GSTIN in uppercase
- Registered address
- Contact email and phone number
Airlines typically send GST invoices via email, either immediately after ticket booking or (for international flights) within 15 to 45 days after travel.
Ensure these details are provided before generating the PNR (Passenger Name Record) during booking.
How to Calculate GST on Air Tickets
- Identify the base fare of the ticket.
- Apply the relevant GST rate:
- 5% for economy
- 12% for business/charter
- Add GST to the base fare to calculate the total ticket cost.
- If canceled, calculate GST on the cancellation fee at the same applicable rate.
Advantages of GST Input for Businesses
By claiming ITC on GST paid for air travel, companies can:
- Save 5%–12% on overall travel expenses
- Improve compliance and audit transparency
- Streamline cost control through automated travel management platforms like Paxes, which helps reconcile invoices and manage GST claims efficiently.
Conclusion
GST on flight tickets is a critical consideration for organizations with ongoing business travel requirements. While the tax adds a layer of cost, the availability of Input Tax Credit allows businesses to reclaim a portion of the expense—provided travel is strictly for business purposes and proper documentation is maintained.
By adopting automated travel management systems and ensuring that GST details are captured accurately during the booking process, companies can maximize savings and remain GST compliant.
GST on Flight Tickets—FAQs
1. Is GST applicable in all countries?
No. Some countries use GST, while others use VAT or similar systems.
2. Is GST applicable to international business travel from India?
Yes, if the point of sale is in India. However, international tickets are zero-rated under GST.
3. How much can companies save through GST input?
Businesses can save 5–12% of travel costs by claiming ITC.
4. Is GST charged on both economy and business class?
Yes. 5% for economy and 12% for business/charter.
5. Who receives the GST collected on tickets?
The amount is shared between the central and state governments.
6. Can I claim GST input on personal travel?
No. ITC is available only for official business travel.
7. What is the GST rate on domestic flight tickets?
- Economy: 5%
- Business/Chartered: 12%
8. Is GST charged on international flight tickets?
No. International ticket sales are zero-rated.
9. Can I cancel a GST-compliant ticket?
Yes. The GST will apply to the cancellation fee.
10. How do I check the GST amount on a ticket?
It is mentioned in the invoice and calculated based on the base fare and ticket class.
11. Are there any additional taxes apart from GST?
No. GST replaces previous levies like service tax and cess.
