GST impact: Like premium air travel tickets, will premium railway tickets cost more after GST 2.0?
ET Online
Synopsis
Get ready for changes in Goods and Services Tax or GST on air travel. From September 22, 2025, premium air tickets will cost more with an 18% GST. Economy class tickets will remain at 5%. Train tickets will not change. AC and premium train tickets will continue with a 5% GST. Non-AC train travel will remain exempt from GST.
By Sneha Kulkarni, ET Online
Most goods and services would now have a 5% or 18% GST rate after the Goods and Services Tax (GST) council recommended a two-tier GST rate system in its meeting on September 3, 2025.
Also read: GST impact on air travel: Do you have to pay extra GST if your travel date is after September 22, 2025?
With an increase in the premium economy, business and first class air tickets, many railway passengers are wondering if a similar hike is also possible in AC class railway tickets?
Speaking about air and train ticket current GST rates, Prabhat Ranjan, Senior Director, Nexdigm, says, “Air Travel (other than Economy): At present, air tickets in business class, premium economy and first class attract 12% GST with input tax credit available. From September 22, 2025, this rate will be revised upwards to 18%, while economy class tickets will continue at a concessional rate of 5%. This means passengers flying in any class other than economy will see a higher GST component in their fares.”
Ranjan further says, “Train travel in non-AC classes (Sleeper and 2S) is currently exempt from GST, and they will remain Nil-rated even after September 22, 2025.
“AC Classes (3AC, 2AC, 1AC, AC Chair Car and Executive Chair Car): At present, these attract 5% GST, and the same 5% rate will continue post September 22, 2025.”
Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP, says: “For air tickets of class other than the economy class, the applicable GST rate was 12%. From September 22, 2025, it would be 18% for the said class of tickets. However in GST, we see three aspects- the date of invoice, the date of payment and the date of supply, if any two conditions are satisfied before the change in GST rates, the old rate is taken. If the air ticket of the said class is booked before September 22, 2025, for any travel date and the payment is also made on the same day of booking the ticket, the GST rate will be 12%, since the date of invoice and the date of payment is before September 22, 2025."
Shivam Mehta, Executive Partner, Lakshmikumaran & Sridharan Attorneys, says, “There is no change in the GST rate on the economy class air travel. It will continue to attract the GST rate of 5% without ITC. For travel in classes other than economy, the applicable GST has been increased to 18%, with service providers entitled to claim input tax credit. This has been confirmed under Serial No. 59 of the published FAQ.”
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After the changes, premium economy, business and first class air tickets are likely to be costlier as the GST rate on them has been increased to 18% from 12%. However, there will be no change in economy class air tickets as the GST on them remains the same at 5%. The new GST rates on first class air tickets will be applicable from September 22, 2025.Also read: GST impact on air travel: Do you have to pay extra GST if your travel date is after September 22, 2025?
With an increase in the premium economy, business and first class air tickets, many railway passengers are wondering if a similar hike is also possible in AC class railway tickets?
Will premium railway tickets cost more in GST 2.0?
In a big relief to many railway passengers, GST on AC and premium coach train tickets has been kept unchanged at 5%.Speaking about air and train ticket current GST rates, Prabhat Ranjan, Senior Director, Nexdigm, says, “Air Travel (other than Economy): At present, air tickets in business class, premium economy and first class attract 12% GST with input tax credit available. From September 22, 2025, this rate will be revised upwards to 18%, while economy class tickets will continue at a concessional rate of 5%. This means passengers flying in any class other than economy will see a higher GST component in their fares.”
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Ranjan further says, “Train travel in non-AC classes (Sleeper and 2S) is currently exempt from GST, and they will remain Nil-rated even after September 22, 2025.
“AC Classes (3AC, 2AC, 1AC, AC Chair Car and Executive Chair Car): At present, these attract 5% GST, and the same 5% rate will continue post September 22, 2025.”
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Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP, says: “For air tickets of class other than the economy class, the applicable GST rate was 12%. From September 22, 2025, it would be 18% for the said class of tickets. However in GST, we see three aspects- the date of invoice, the date of payment and the date of supply, if any two conditions are satisfied before the change in GST rates, the old rate is taken. If the air ticket of the said class is booked before September 22, 2025, for any travel date and the payment is also made on the same day of booking the ticket, the GST rate will be 12%, since the date of invoice and the date of payment is before September 22, 2025."
Shivam Mehta, Executive Partner, Lakshmikumaran & Sridharan Attorneys, says, “There is no change in the GST rate on the economy class air travel. It will continue to attract the GST rate of 5% without ITC. For travel in classes other than economy, the applicable GST has been increased to 18%, with service providers entitled to claim input tax credit. This has been confirmed under Serial No. 59 of the published FAQ.”
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