Luxury travel is set to burn a deeper hole in the pockets of India’s wealthy, as the Goods and Services Tax (GST) Council has approved a steep increase in tax rates on private jets, helicopters, yachts, and premium air tickets. The revised rates will take effect from September 22 under the new GST framework.
The GST on aircraft for personal use, including private jets and helicopters, has been raised from the existing slab of 28% plus 3% compensation cess to a flat 40% rate. Currently, acquiring a private jet in India is already heavily taxed, factoring in customs duties, registration charges, and GST. The latest hike is expected to significantly inflate acquisition and operating costs.
As per industry estimates, entry-level light jets such as the Cirrus Vision Jet are priced at around ₹16 crore, while the long-range models like the Gulfstream G650 can cost over ₹550 crore. According to aviation sector experts, the increased GST rate could push costs up by anywhere between ₹1.5 crore and ₹40–50 crore, depending on the category of aircraft.
The tax burden will not be limited to private owners. Regular passengers opting for premium economy, business, and first-class tickets will now be charged 18% GST, against the earlier 12%. The move, however, will allow airlines to claim input tax credit (ITC), potentially providing some relief to the sector. Economy class fares remain taxed at 5%, a rate that was earlier rationalized to make air travel more affordable for the middle class.
Yachts and luxury marine sailing, which has emerged as a new leisure pursuit among India’s ultra-rich, is also set to become costlier. GST on yachts and other pleasure vessels has been raised from 28% plus 3% cess to 40%, aligning taxation on luxury marine assets with that of private aircraft.
Interestingly, unmanned aerial vehicles (drones), which previously attracted 18–28% GST, have been shifted down to the lowest 5% slab, signalling encouragement for industrial and commercial applications in India’s growing drone sector.
The Council, chaired by Finance Minister Nirmala Sitharaman, has approved a two-tier GST structure of 5% and 18%, while creating a 40% special slab for super-luxury and so-called “sin goods.” This latter category is reserved for items seen as either indulgent or harmful to society and will now include private aviation and luxury marine craft.