TRANSPORT

Luxury
travellers to
feel the pinch
BS REPORTERS
New Delhi, 19 May

The new GST will make your travel cheaper but

be prepared for a bigger hole in the pocket if you
are a luxury traveller. True to its aim of making
travel more affordable, the tax rate has not
been raised on the transport sector. Finance
Minister Arun Jaitley on Friday announced
the rate at five per cent (rail, air and road trav-
el). This is less than the prevailing six per cent,
while both passenger and sleeper class rail
travel have been exempted from GST.
Another reason for keeping the rate on
transport services in the lower bracket is
because unlike other sectors, many entities
here will not get input credit on tax paid. Since
the transport sectors main input is petroleum,
which has been kept out of the GST ambit, they
will not get any input credit on tax, said Jaitley.
However, the tax rate for business class
travel was increased by three per cent and sen-
ior railways ministry officials said GST would
lead to an increase of 1.3 per cent from the cur-
rent 3.7 per cent in fares for the air-conditioned
class and freight services.
By ensuring that the new rate structure is
not inflationary, the government has demon-
strated its pro-consumer, pro-business stance.
GST will simplify the tax regime in the country
and we are excited to see how its impact
unfolds across different sectors, said Amit
Jain, president, Uber India & South Asia.
Experts termed it a big positive for the sec-
tor. S P Singh, coordinator, Indian Foundation
of Transport Research and Training, said the
uniform five per cent service tax rate for goods
transport under GST, along with the hefty ben-
efit of input tax credit to transporters, was most
likely to bring down net transportation cost
and, so, gross freight charges by 4-10 per cent.
For the aviation sector, the new rate is a big
positive; it was bracing for a higher one.
Though the rate for the business class was
increased to 12 per cent from the current nine
per cent, experts said this would have no
impact. Most of the seats in the domestic sec-
tor are in the economy section, where there has
been a reduction of one per cent, said Peeyush
Naidu, partner at consultancy Deloitte India.
Low ticket prices helped India become the
third largest aviation market in 2016. The new
rates will continue to support an affordable fare
regime. Expect the high growth rate in domes-
tic traffic to continue in the near term, with
further upside once the GST impact on the ec-
onomy is visible in one to two years, said Kapil
Kaul, chief executive, South Asia, at CAPA.