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GST Transition 2025: Key Things Air Travellers Should Know Before Booking Tickets

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Plan on going on a vacation or eating out? Well, that might burn a hole in your pocket for now. The new changes by the GST council in the Goods and Services Tax (GST) are likely to impact the tax rates for private jets, premium air tickets, yachts and more. These changes are likely to come into effect from September 22 as per the new framework.

The new changes aim at streamlining the entire process while reducing loopholes. These changes are integrated to ensure a transparent taxation process. Several aspects are likely to be affected, like air travel, yachts, taxes on commercial drones and more. It's a massive shift for businesses and consumers to a more digitally-driven system. This will have a significant impact on the indirect tax regime of India, making it more streamlined.

The Two-Rate Tax Structure

The GST Council has discussed these changes during their 56th meeting held on September 3. The new two-rate structure slashes a significant 5%, 12%, 18% and 24% with the revised structure to be around 5% and 18%. The super luxury goods are, however, reserved at 40%.

The new move is aimed at lowering the prices of several products and services, especially in daily use. However, there are specific items that continue to be in the same criteria, with others increasing.

GST 2.0: Premium Travel and Luxury Air Tickets

Below is a complete overview of the revised GST 2.0 rates in India for all the relevant categories:

It is anticipated that the airlines will levy these additional charges on the passengers. As a result, the business and first-class ticket fares are likely to increase. Premium air travel has been in demand lately because of the comfort it offers. However, with the fares increasing significantly, there might be a gradual shift of people towards economy class travel.

Things to Know Before Air Travel Booking

With these major changes in the GST for air travel, it is crucial to know certain things about booking the tickets as well. With the premium flight prices increasing, the airline operators believe that there will be a significant shift to the economy.

The private jets, yachts and premium air ticket prices are increasing significantly. Here are a few things to keep in mind about booking these flight tickets:

• The 40% GST will increase the cost of acquisition for charter operators and UHNIs.

• The applicable GST will depend on various factors like date of booking, date of payment and date of invoice. If any of these is dated before September 22, the old GST rates will be applicable.

• If you're planning to fly first-class or business class, it is best to book your travel before September 21.

• If you plan to cancel your ticket to get the refund, the amount will be decided as per the original GST charged.

• Luxury travel post September 22 will have a significant increase due to the new 40% GST.

• The economy class GST rates remain unchanged (5%) so, the price of the tickets won't be affected much.

GST 2.0: Major Changes in Other Things

Below are GST changes in other aspects as well:

GST 2.0: Dining Out and Hotel Stays

Below is a table overview of the slashed GST rates in dining out and hotel stays:

GST 2.0: Grocery Shopping

The table below contains all the information about the difference in GST rates:

GST 2.0: Miscellaneous Items

Here's a brief overview of the price reduction in miscellaneous items:

Conclusion

With the significant GST changes, the middle-class people are likely to benefit a lot. However, premium items are likely to become more expensive. Before you book your next travel tickets, you'll have to consider the revised rates. While the rates have been revised, these will come into effect from September 22. It is best to keep an eye out for these changes and make your purchases accordingly. Make sure to keep the new GST rates in mind to benefit and save on your purchases.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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