India launches New Service Tax on Domestic and International Travel

A service tax of 10.3% on the gross value of tickets for all classes on domestic flights within India and economy class on international flights from India will be levied on tickets sold, issued or re-issued, effective today, 1 July 2010, as per the directive of the Government of India, Ministry of Finance.

All domestic travellers within India will therefore have to bear a service tax of 10.3% on the gross value of the ticket, or Rs. 103, whichever is lower.

For economy class tickets for international travel, a service tax of 10.3% on the gross value of the ticket or Rs. 515, whichever is less, will be levied.

The service tax is only applicable on journeys originating in India. This service tax as collected will be credited to the Government of India Service Tax account.

The gross value of the ticket for the calculation of the service tax will include the base price and fuel surcharge in addition to the congestion fee. Passenger service fee and airport charges (UDF/ADF) will not be covered for determining the gross value of the ticket.

Airline crew travelling on duty and United Nations staff are exempted from paying this service tax.

This exemption will also include those embarking on a journey originating or terminating in an airport located in the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Bagdogra in West Bengal.

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