Input Tax Credit (ITC) on Flight Tickets

The Goods and Services Tax, or GST for short, is an important tax that is levied on both goods and services starting from July 1st, 2017. It replaced this country’s existing tax system, which had been in use for many years. The tax system was reformed to introduce a single tax levied by the government.

After implementation of GST, all the business entities are trying to minimize their cost by availing the maximum Input Tax Credit of GST wherever possible and to the extent not restricted by any section or rule of GST Act. Further in this process, businesses face various issues due to lack of clarity in flow of ITC or due to complexity of the transaction.

GST on Flight tickets as of July 18th, 2022 are as follows:

Seat Type	GST Rate
Business class tickets	12%
Chartered flight tickets	12%
Economy class tickets	5%

Economy class flight tickets to and from Bagdogra (West Bengal) and the North-eastern states of India, namely, Assam, Sikkim, Tripura, Arunachal Pradesh, Manipur, Mizoram, Meghalaya, as well as Nagaland, are exempted from GST.
GST on air ticket booking is imposed in addition to other charges, namely airport charges. These airport charges are levied by the Airport Authority of India (AAI).

Businesses can get GST Input on airline tickets under the GST regime.This stands true for air travel expenditure that is incurred when employees travel for official reasons, i.e., business purposes. However, the Input Tax Credit can be only availed for the official air travel of staff and not on the personal use of employees. The following are the main points about flight GST that need to be remembered:

If the traveller provides the GST number of their business entity while booking a flight ticket, traveller will be eligible to receive an input tax credit (ITC) on the GST tax portion of ticket.
For this, entity would require the flight GST Invoice, which is provided by the Airline.
This GST input on flight tickets can help travellers reduce their travel expenses by 5-12% (depending on the class of ticket purchased).
On the basis of the traveller’s company, GST registration state, and the Airline GST registration state, either CGST or SGST is charged. Furthermore, IGST is charged as the GST tax amount.

Let’s use the following example to better understand this: – Assume Traveller A, whose Business entity XYZ has the GST registration in the state of Maharashtra, wants to book a flight from Nagpur to Delhi. In this case, as A’s business entity is registered in the same state as the departure state of A, hence CGST or SGST will be charged as GST Tax amount. Similarly, if Traveller A’s business entity is registered in the state of Kerala, but the traveller is booking a flight ticket from Nagpur to Delhi, then, as the two states differ, hence IGST will be charged in this case of GST on flight tickets.

GST Invoice for Flight Ticket

The company will be eligible for claiming the ITC on air tickets but this is subject to having the receipt of a valid tax invoice that contains the prescribed particulars stated under the law.

GST invoices raised by the air carrier or travel agent must have the following particulars-