The airline vistara has got a strange problem. The domestic flights premium economy seats don’t exactly fall under GST tax slabs. This is considered as business class for the sake taxation.
Worried about the tax rate, the airline companies requested the centre to add economy class slab in the GST system. This will make the prices attractive to the customers. The Vistara CEO Phee Teik Yeoh said that premium economy is included in the business class tax. He also added that they have written to the government to convince them about the tax rate. They would keep trying to convince the government.
After GST implementation the economy class flight rate has dropped. However, the fare of a business class ticket has increased. The premium economy ticket fare of Vistara has also increased.
Vistara premium economy ticket fare is higher than economy class tickets. However, it is lower than the business class ticket fare. They also offer allowance for extra baggage. The Chairman of Civil Aviation Committee has asked the central government to take off the IGST on the aircraft spares that are imported once the servicing is done. It is also requested that input tax credit is made available on economy class ticket fare.
During economy class tour, input tax can be claimed only on input services. It is not implemented on goods procurement or aircraft spare importing. Entire input tax can be claimed only on input goods or services.