Rising GST to Make Flights Expensive and Fuel Production Costly, Burden on Common Man

National News:  The oil and gas industry and air passengers in the country are going to face additional burdens soon. The GST Council has decided to increase the tax on services related to the exploration and production of oil and gas. Now this rate will increase from 12 percent to 18 percent and will be implemented from September 22. Although companies will get the benefit of input tax credit (ITC), the overall cost is bound to increase.

Increase in production cost

Experts say that since crude oil and natural gas are still outside the purview of GST, this increased tax will have a direct impact on the cost of production. Prashant Vashishtha, Senior Vice President, ICRA Agency, said that since April 2025, oil and gas prices have come down due to international reasons. During this period, the profit margin of companies has come down, and now the increased tax rate will create more problems for them.

Impact on air travel

The change in GST will also have a direct impact on air passengers. Now 18 percent GST will have to be paid on non-economy tickets like business, first class, and premium economy, whereas earlier it was 12 percent. The rate for economy class passengers will remain at 5 percent.

The government has clarified that this change will be applicable only on premium class tickets, so there will be no additional burden on common passengers.

Impact on passenger choice

Travel experts believe that after premium tickets become expensive, many people will prefer economy class. Karan Agarwal, director of travel company Cox & Kings, says that airlines can now rethink their premium facilities and pricing.

Increasing demand and challenge

The demand for premium economy seats has increased continuously in recent years. People want more comfort in long-distance flights. But now the increased GST will decide whether passengers will be ready to spend extra money or will turn to the less expensive economy class.