Air upgrades get taxing

New Delhi: The finance ministry has now decided to levy 12.25% service tax from all passengers who occupy the Business and First Class seats in international airlines. And these would also include Economy Class ticket holders who are upgraded to the upper class free of charge.
According to a fresh directive to all international airlines last weekend, the service tax directorate has asked carriers to deposit 12.25% tax based on their passenger manifest — which will only reflect the number of passengers travelling in upper class and not the category of ticket they hold.
With this, airlines will now be forced to terminate all free upgrade requests or charge service tax — which would range anywhere between 15,000 and Rs 80,000 per passenger depending on the sector they fly and the upper class they choose — from all such passengers," an airline industry source said.
28/08/06 Byas Anand/Times of India

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