Tax leviable on entire air journey

New Delhi: The Central Board of Excise and Customs has clarified several issues relating to levy of service tax on international travel by any class, other than economy class.
Service tax is levied by aircraft operators on services rendered to any passenger in India embarking on an international journey, in any class other than economy class, with effect from May 1, 2006, under Section 65(105)(zzzo), read with Section 66 of the Finance Act 1994.
The Explanation to the above clause says that economy class in an aircraft for scheduled air transport of passengers means the class attracting the lowest standard fare where there is more than one class of travel, while in an aircraft meant for non-scheduled air transport of passengers, no class of travel shall be treated as economy class.
Many airlines protested against the levy on the ground that the levy makes the international travel by business class more expensive and that the passengers will be encouraged to book their tickets abroad.
The CBEC now says that for a journey starting from India with stopover at intermediate airports, say Mumbai-Dubai-New York, the stopover is immaterial and tax should be paid on the entire fare.
23/10/06 T N C Rajagopalan/Business Standard

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