GST Reform Alert: Business & Premium Air Travel GST May Rise to 18 %

What’s Happening: Proposed GST Variation in Air Travel

• The Indian government is considering hiking GST on business, premium economy, and first-class air tickets from 12 % (with Input Tax Credit) to 18 % (with ITC), affecting both domestic and international routes.

• Economy-class tickets remain unaffected at a 5 % GST rate.

• The move is part of a larger GST rationalisation aiming to eliminate the 12 % and 28 % slabs, consolidating into just 5 % and 18 %.

• The GST Council is set to debate these reforms on September 3–4, 2025.

• State governments are raising concerns about potential revenue loss, with demands for compensation mechanisms being tabled—some estimates include Rs 2,000 crore annual shortfall (Jharkhand) and even Rs 7,000 crore for Telangana.
  
  

Why This Matters to B2B Travel Professionals

1. Cost Upswing in Premium Airfares

A GST hike means higher ticket prices, which could impact corporate travel budgets and margin models for agents and consolidators.

2. Re-evaluate Client Proposals

Even with ITC, the incremental GST could affect negotiations and pricing forecasts. Cost transparency and accurate quoting will be crucial.

3. Strategic Pricing Shifts

There may be incentives to shift bookings toward Economy or leverage Premium Economy (where allowed), which may offer better margins post-adjustment.

4. Operational Readiness

If reforms roll out pre-Diwali—a timeline hinted at by the Prime Minister—it’s essential that booking systems and invoicing engines are GST-ready.

5. Engage Industry Stakeholders

Stay involved in trade forums and industry groups to ensure business travel needs are represented, especially regarding timely adjustment and system readiness.

Gujarat’s Two-Slab Vision & Aviation’s GST Adjustment

• Overview of the plan to shift to just 5 % and 18 % slabs.

• How business and premium air travel may be folded into the higher bracket.

• Timeline considerations based on GST Council meeting and Diwali rollout.
  
  

Tactical Recommendations

• Update fare quotes and client proposals.

• Encourage bulk or package deals to soften GST impact.

• Monitor state compensation developments to anticipate macro shifts.
  
  

Looking Ahead: Industry Collaboration & Policy Influence

• Coordinate with consolidators and corporate planners.

• Advocate for phased rollout or relief measures for business travel segment.

Conclusion & Takeaway

The proposed elevation of GST on premium travel to 18 % represents a strategic pivot that B2B travel professionals must address with agility. By updating systems, revising pricing models, and staying active in industry discourse, you can mitigate cost shocks and maintain valued client relationships at this critical juncture.

Stay Connected with the Travel Community.

Follow our updates at blog.agentbazar.in and transform how you support your clients at every stage of travel.