New GST on Air Tickets in India 2025: Rates, Impact, and Travel Insights

Learn about GST on air tickets, including tax rates for economy and premium classes, ITC benefits, exemptions, and its impact on travel costs.
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04 October 2025

In an era of frequent air travel, comprehending the implications of Goods and Services Tax GST on air tickets is essential. This guide aims to decode the complexities, shed light on the reasons behind the taxation, and provide insights into navigating this aspect of your travel expenses. Keep reading to make informed decisions about your air travel expenditures.

Decoding GST on air tickets

As you book your next flight, unravel the layers of GST on air tickets, demystifying the tax structure that shapes the cost of your journey.

  1. The economic backbone: The imposition of GST on air tickets serves as a significant revenue stream for the government. These funds contribute to the development of aviation infrastructure, ensuring safer and more efficient travel experiences for passengers.
  2. Equalising taxation: GST ensures a uniform tax structure across various segments of air travel, from economy to business class. This standardised approach eliminates discrepancies and creates a fair taxation system within the aviation industry.
  3. Stimulating economic growth: By taxing air travel, the government indirectly encourages domestic and international tourism. This, in turn, stimulates economic growth by supporting businesses related to the travel and hospitality industry.

Understanding GST on air tickets: Key insights

  1. Tax Slabs and Classification: GST on air tickets is based only on the travel class.
    • Economy Class is taxed at a lower rate of 5%, recognising it as an essential service.
    • Premium Classes (Premium Economy, Business, First Class) are taxed at the standard 18% rate, as they are considered premium or discretionary services.
  2. Input Tax Credit (ITC) for Businesses: Businesses can usually claim Input Tax Credit on GST paid for air tickets if the travel is for business purposes.
    • ITC is not available for Economy Class tickets since they carry a concessional rate.
    • ITC is available for Premium Class tickets taxed at 18%.
  3. Domestic vs. International: The GST rates (5% or 18%) are generally the same for both domestic and international flights starting in India, with GST charged on the airfare’s taxable value.
  4. Exemptions: Flights under the Regional Connectivity Scheme (UDAN) remain exempt from GST. There are also certain rebates available in specific cases to help travellers. For more details, visit the GST state code page to learn about tax codes applicable in different states.
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New GST Rate on Flight Tickets

The major change in the updated GST framework is that premium air travel has been moved to the higher 18% tax slab, while essential travel continues to be taxed at a lower rate.

Flight Type

Flight Class

Old GST Rate

New GST Rate (Effective Sept 22, 2025)

Change

Domestic/International

Economy Class

5% (Without ITC)

5% (Without ITC)

No Change

Domestic/International

Premium Economy, Business, First Class

12% (With ITC)

18% (With ITC)

Increased


Impact of GST on air fares

The new GST rates have increased the price difference between economy and premium air travel.

  • Economy Class: The 5% GST rate remains unchanged, keeping air travel affordable for most people and simpler compared to the earlier complex tax system.
  • Premium Classes: The GST rate has risen from 12% to 18% for Business and First-class tickets, making fares higher. However, businesses may benefit slightly from the full Input Tax Credit (ITC) available on these tickets.

Transition Rule for Air Ticket Bookings

The GST rate you pay usually depends on the Time of Supply, which is typically the invoice date or payment date. If you booked and paid for a premium-class ticket before September 22, 2025, the old 12% GST rate applies, even if you travel after this date. However, any new bookings or re-ticketing made on or after September 22, 2025, will be charged the new 18% GST rate.

How the GST Rate Change Affects Your Air Travel Costs

The GST Council has introduced a new tiered tax system, increasing the GST rate on non-economy air travel in India. From September 22, 2025, the GST on premium economy, business, and first-class tickets will rise from 12% to 18%, while the GST rate for economy class tickets will remain at 5%.

Here’s a comparison of ticket prices using the old 12% GST rate and the new 18% GST rate for a business class ticket, based on the “Pre-GST Price” (the base fare before tax) from your table:

Travel Class

Base Fare (Rs.)

Total Price at 12% GST (Rs.)*

Total Price at 18% GST (Rs.)**

Price Difference (Rs.) (18% vs 12%)

Economy Class

5,000

5,250 (5% GST)

5,250 (5% GST)

0

Business Class

20,000

22,400 (12% GST)

23,600 (18% GST)

1,200


*Calculated as Base Fare + 12% of Base Fare (Rs. 20,000 + 12% of Rs. 20,000 = Rs. 22,400)
**Calculated as Base Fare + 18% of Base Fare (Rs. 20,000 + 18% of Rs. 20,000 = Rs. 23,600)

This means a business class ticket with a Rs. 20,000 base fare will now cost Rs. 1,200 more, making the total increase Rs. 3,600 compared to the original pre-GST price.

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