Service Tax in International Travel-Economy Class and Domestic Travel- All Classes

Dear Trade Partner,

The Ministry of Finance, Government of India has announced vide Notification No. 25/26&27 2010 - Service Tax, introduction of Service Tax on Economy Class of International journeys and all classes of Domestic India journeys.
Name of Fee Service Tax On Economy Class
Code JN
Effective Travel date 1 July 2010
Application Per journey originating in India
Type of Journey International
Class of Service Economy
Rate 10% of the gross value of the ticket or INR 500 per journey, whichever is less, for passengers embarking in India for an international journey in economy class
Cess Additional Education Cess (2%) and Higher Education Cess (1 %), i.e. total 3% will apply on the above tax. viz. total 10.3% of gross value or INR 515 as applicable
Exemptions • Airline crew on duty
• UN Staff
• A person who has arrived at a customs airport from a place outside India and is in transit through India, provided that he does not pass through immigration and does not leave customs area and continues his journey to a place outside India;
• Passengers embarking on a journey originating or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura or Baghdogra in West Bengal. The exemption therefore applies to/from the following airports: DIB, GAU, JRH, IXI, IXS, TEZ, IMF, SHL, AJL, DMU, IXA, IXB

The Service Tax will be levied for travel effective 1 July, 2010.

IATA has been advised of this requirement of Government of India and is in the process of distributing it to all GDSs for coding in their systems.

The Service Tax on Business Class on international journeys starting in India remains the same as existing in the system.