GST on International Flight Tickets and Input Tax Credit: A Complete Guide!

When discussing GST (K3), business travellers must be aware of the Input Tax Credit and how to avail of its benefits for their company. International travel is slowly becoming imperative for businesses, and even MSMEs can no longer stay behind. Read this article to understand everything about GST on international flights and how to reduce the tax burden through ITC:

 

Business travellers have to often travel across the globe to cultivate meaningful business relationships, for engagements outside the company and for several other reasons. Hence, ever since it came into effect on July 1st, 2017, air tickets have also been subject to the unified taxation system of GST that has managed to revolutionise the tax regime in India. This new system has reformed how we pay taxes, especially travel GST rates, while significantly impacting the economy of our country.

 

Input Tax Credit or ITC, on the other hand, is a primary concept of GST that has helped eliminate the cascading effect of taxes. Every company that is registered under GST (K3) is eligible to claim the ITC. Let us understand these two critical concepts that can significantly simplify international travel for businesses below:

 

International Flight Tickets GST Rate

 

Air tickets in India have been subject to the Goods and Services Tax (GST) since its inception in July 2017. GST is levied on air tickets at the point of sale. So, GST on international flight tickets is applicable if the ticket is booked from Ex-India; that is, the departure country is India. Even if the airline is an international airline, they are bound to collect GST on the air tickets. Furthermore, they are also obliged to share the GST Invoice with the travellers. If the point of sale is not India, then GST will not be applied to that Air ticket; hence, GST (K3) invoices for international flights for such cases will not be applicable.

 

GST on travel varies on the basis of the air ticket class. Here is the breakdown of GST applicable on airfare under GST on tour and travels:

 

Seat Type	GST on International flights
Business or Premium Economy	12%
Economy	5%

 

Under the previous system, taxes were imposed on all airline tickets. However, the tax rate under VAT was 8.4% for business class tickets and 5.6% for economy class tickets. Hence, since the introduction of GST on airline tickets, the overall tax imposed has been lowered. 

 

We can understand this with the comparative chart below that highlights the reduction in the taxes under tours and travels GST rate:

 

Charges Imposed	Fare Under Service Tax (ECONOMY CLASS)	Fare Under GST (ECONOMY CLASS)
Base Charge	2000	2000
Airline Fuel Charge	700	700
CUTE Fee	50	50
User Development Charge	150	150
Passenger Service Fee	239	239
Service Charge	154 (at 5.6%)	137.5 (at 5%)
Surcharge	12	12
Total	3305	3288.5

 

However, it is essential to point out that even though the taxation rates have been changed, the taxation principles applied under the service tax era continue to be imposed in the new regime of air ticket GST rate, especially on international tickets. This means that non-stop flights from India to abroad are not more expensive. This eases Indian airlines from fearing that travellers will opt to fly with other carriers with layovers. The belief that the passengers won’t have to pay GST on the second leg of the flight is unfounded because the rules under service tax continue to apply under GST.

 

How Can Business Travellers Avail of GST Input Tax Credit on Flight Tickets?

 

Every service provider needs to collect GST (K3) for offering goods and services. However, when these services are used for work, customers can get input credit. Hence, the organisations where the employees are subject to travel can avail of GST input on flight tickets booked for their employees travelling for official work. The companies can claim GST inputs for their tax to book flight tickets. This will reduce the overall tax that they are supposed to pay.

 

What is required to claim ITC in GST?

 

Customers or companies that want to claim the Input Tax Credit on GST on air tickets must provide the following information-

• Company’s registered name
• Company’s GST number
• Company’s registered address
• Company’s registered contact information

If a customer has provided the GST No. of their business entity while booking the air ticket, then the customer can avail of the Input tax credit on the GST amount of their air ticket. For this, the customer would need the GST Invoice with the travel GST rate, which is provided by the airline to the customer. Usually, Domestic Airlines like Indigo, SpiceJet, Air-Asia, Vistara, Go-First etc., provide GST invoices either immediately after booking the air ticket or immediately after the travel is completed. But in the case of international airlines, GST (K3) invoice for international flight bookings is provided 15-45 days after the travel date.

How can myBiz help in getting GST Invoice for International flights?

 

myBiz by MakeMyTrip is a platform that more than 35,000 corporate customers use to book their international flights. myBiz is preferred by corporate travellers for international flight bookings due to the following reasons: 

• All international Flight options are available on myBiz.
• myBiz also provides corporate fares on international flights (on certain airlines).
• Easy filtering and sorting options.
• Fast and smooth booking platform on mobile apps and desktop devices.
• Exhaustive payment options.
• Last but not least, availability of GST invoices on myBiz for international flights.

So, suppose a corporate user is booking an international flight on the myBiz platform by providing their corporate GST number. In that case, myBiz provides assured GST Invoices for these international flights on its platform, helping them avail of the Input Tax Credit under GST. So, signup with myBiz to make your business GST ready today. Join now! 

 

 

Frequently Asked Questions (FAQs)

 

Q1. What is the airfare GST on international travel?

Ans. For travellers flying on Economy class tickets, a GST rate of 5% will be applicable on international travel. On the other hand, the applicable GST rate is 12% for Business and Premium Economy class fliers.

 

Q2. Can an invoice be changed from B2C to B2B?

Ans. As per the rules, changing an invoice from B2C to B2B is not permissible.

 

Q3. Do frequent fliers benefit from GST on flights?

Ans. Yes, the GST (K3) imposed on flight tickets benefits frequent fliers more than low-frequency fliers. However, the new tax regime under GST is beneficial for both.

 

Q4. How has GST proved to be economical for business travellers?

Ans. Business travellers greatly benefit from GST on air fares since they are able to claim Input Tax Credit on the tax paid. Furthermore, GST has lowered the overall tax rate. For example, a VAT of 5.6% was applicable on Economy tickets earlier as compared to the new GST rate of 5%.

Related Blogs:

• •  An Ultimate Guide on GST for Travel
• •  Everything About GST on Hotel Rooms and Input Tax Credit
• •  GST Bill In India: A Complete Guide For Business Travellers!
• •  GST Registration: A Step-by-Step Guide For Small Businesses
• •  What is Business Travel? A Complete Guide for Corporates!
• •  Corporate Travel Management - An Ultimate Business Guide