With effect from July 1, 2010, the definition of taxable service for the taxable service ‘Transportation of Passengers Embarking in India for Journey by Air’ has been amended. The new definition is as follows:
“Taxable service”… means any service provided or to be provided to any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for domestic or international journey [Section 65(105)(zzzo)].
The words for international journey in any class other than economy class have been substituted by domestic or international journey by the Finance Act, 2010 with effect from (w.e.f.) July 1, 2010.
The definition of passenger has been modified. The modified definition, w.e.f. July 1, 2010, reads:
… “Passenger” means any person boarding an aircraft in India for performing domestic journey or international journey’[Section 65(77c)]. With effect from July 1, 2010, Notification No.26/2010-ST dated June 22, 2010, exempts taxable service from so much of service tax as is in excess of:
10% of the gross value of the ticket or Rs100 per journey, whichever is less, for passengers travelling in any class in India
10% of gross value of the ticket or Rs500 per journey, whichever is less, for passengers embarking in India for an international journey in economy class.
Notification no.27/2010-ST dated June 22, 2010, wholly exempts taxable service for passengers embarking on a journey originating or terminating in an airport located in the seven northeastern states, Sikkim and Baghdogra in West Bengal.