GST Council hikes tax on private jets, yachts to 40%
What's the story
The Goods and Services Tax (GST) Council has announced a major hike in taxes on private aircraft, yachts, and premium travel. The new rates will come into effect from September 22. Under the revised GST structure, personal aircraft such as private jets and helicopters would now be taxed at a flat rate of 40%. Earlier, these were taxed at 28% GST plus a 3% Compensation Cess.
Economic implications
Cost of luxury flying set to soar
The new GST slab will have a major impact on the cost of acquisition and import for charter operators and ultra-high net worth individuals. The previous cess mechanism has been removed, making luxury flying significantly more expensive. Yachts and other pleasure vessels are also going to be taxed at the same 40% rate under the new regime.
Air travel costs
Premium air travel fares to rise
The GST hike also extends to premium air travel. Non-economy class tickets, which were previously taxed at 12%, will now attract an 18% GST. Airlines are likely to pass on this additional levy to passengers, making business and first-class fares even more expensive. This comes at a time when the demand for premium air travel has remained strong.
Tax strategy
Discretionary flying and sailing face higher tax burden
The GST Council has made its position clear: discretionary flying and sailing will now be subject to a higher tax burden. This comes even as drones, simulators, and freight services move to lower GST slabs. The move is part of a broader strategy to close loopholes in the taxation of luxury assets and ensure that high-end travel bears its fair share of taxes.