Service Tax to be levied on Domestic and international air tickets from July 1

Domestic and international air fares would rise by Rs 100 and Rs 500 respectively from July one with the government issuing a notification to bring air travel into the service tax ambit.

Government had proposed in the 2010-11 Budget that 10 per cent service tax be charged on air travel aiming at raising Rs 600 crore and Rs 1,000 crore annually.

It had proposed to expand the scope of air transport services to attract service tax to include domestic journeys and international journeys in any class.

The notification, issued by the Department of Revenue on Tuesday, said that for domestic travel, “ten per cent of the gross value of ticket or Rs 100 per journey, whichever is less” would be charged from passengers travelling in any class — business or economy.