Domestic and international air fares will rise by Rs 103 and Rs 515, respectively with a government notification to bring air travel into the service tax ambit coming into effect from Thursday.
Government had proposed in the 2010-11 Budget that 10 % service tax be charged on air travel aiming at raising Rs 600 crore and Rs 1,000 crore annually.
For domestic travel, 10% of the gross value of ticket or Rs 100 per journey, whichever is less would be charged from passengers travelling in any class?business or economy.
For international journey, it would be ?10% of the gross value of the ticket or Rs 500 per journey, whichever is less, for passengers embarking in India for an international journey in economy class.?
Air travellers would be exempted from paying this tax on a journey originating or terminating in an airport located in the northeastern states and J&K.
Meanwhile, the global air traffic has for the first time reached above pre-recession level with carriers reporting 12% jump in passenger numbers in May over the corresponding month last year, International Air Transport Association (Iata) data showed.
?Demand rebounded strongly in May following the impact of the European volcanic ash fiasco in April. Passenger traffic is now 1% above pre-recession levels, while the freight market is 6% bigger,? Iata director general and CEO Giovanni Bisignani said. Aviation stocks have also in the last few months reflected strong recovery in the airline sector which was hit the hardest following the collapse of financial market.