GST impact on air travel: Do you have to pay extra GST if your travel date is after September 22, 2025?

On September 3, 2025, the Goods and Services Tax (GST) council recommended a two-tier GST rate system, meaning that most goods and services will now have only a 5% or 18% GST rate . Certain luxury and sin goods and services will be taxed at a higher rate of 40%. However, if you are flying premium economy, business, or first class, your tickets are going to cost more since they will incur 18% GST rate. For economy class tickets, the GST remains at 5%, as it was before. The new GST rates kick in on September 22, 2025.

For instance, if you’re looking at a flight ticket for September 24, 2025, and you book it on September 4, 2025, for a business class seat, you’ll pay 12% GST. But if you wait and book the same ticket on September 23, 2025, you’ll end up paying 18% GST instead.

Chartered Accountant Deep Koradia says: “As per Section 14 of GST Act, if time of supply in case of services in any of the two events out of three as listed below, falls before the date of change in rate, then the old rate will be applicable (and vice versa):
● - Date of Invoice
● - Date of Payment
● - Date of Service Provided

The guidance clarification released by the Finance Ministry on September 3, 2025 explains:

As per Section 14 (a)(i) of CGST Act, 2017, in case the goods or services or both have been supplied before the change in rate of tax, and the invoice for the same has been issued after the change in rate of tax, then the time of supply i.e. date of liability to pay tax on such supply will be as follows:

• If the payment is received after the change in rate of tax, then time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier.
• If the payment has been received before the change in rate of tax, the time of supply shall be the date of receipt of payment.

Also read: GST on health and life insurance premiums reduced to zero: See how it will impact your policy costs

Do you have to pay extra GST if your travel date is after September 22?

Chartered Accountant Manas Chugh, Head- Regulatory Services, Osgan Consultants says: “In the case of air tickets booked and paid before September 22, 2025, the old GST rate of 12% will continue to apply.”

Chartered Accountant Ankit Joshi, Partner – Indirect Tax, N. A. Shah Associates LLP agrees with Chugh, saying that in case of air tickets, since the invoice is issued and payment is made at the time of booking itself , the existing rate of GST (5% economy, 12% others) will apply and not the revised rate even if the date of travel is after September 22, 2025.

Liberatha Kallat, CMD, DreamFolks, said to ET Wealth Online: "The revised GST structure brings clarity and predictability for air travelers, especially for those booking economy seats. Passengers who book and pay before the rate change will continue to enjoy the existing rates, ensuring fairness and avoiding last-minute surprises. This citizen-first approach not only balances the government’s revenue objectives with consumer convenience but also acts as a catalyst for the hospitality sector, as greater travel demand will translate into higher occupancy in hotels, restaurants, and allied services—strengthening the overall travel and tourism ecosystem."

Also read: GSTN has done this change in GST portal for hassle free tax refund claims

What about cancelled flight bookings?

Koradia says that there is no restriction on issuance of Credit note u/s 34 in case a ticket is cancelled and service is not provided. If at the time of booking, GST at 12% rate was charged, then the airline would give 12% GST refund on cancellation. Even if at the time of cancellation, the GST rate increases to 18%, that will not affect the amount of GST refund.

A full refund including GST at the rate mentioned in the invoice is possible, subject to the travel company deducting the cancellation charges, but GST law does not restrict refund of GST due to cancellation of ticket.