Travellers booking Premium Economy, Business, or First Class flights from India will soon have to shell out more, thanks to a Goods and Services Tax (GST) hike announced as part of the new tax reforms rolled out on September 3, 2025. The updated GST structure, effective September 22, pushes the tax rate on premium air travel from 12% to 18%.
While there was early speculation that all air travel might fall under a lower, unified 5% GST slab, the government has clarified that only economy class will continue at 5%. Non-economy travel, both domestic and international (originating in India), will now attract the higher 18% GST rate.
If you’re flying for work and your business is GST-registered, the news isn’t all bad the tax can be claimed as Input Tax Credit, meaning the increased GST can be offset against your company’s tax dues. But for individual flyers, this could mean noticeably higher fares, especially on international routes or last-minute business class upgrades. 
Even award tickets redeemed using miles or points won’t escape the impact. The tax applies to the base fare, regardless of how the ticket was paid for, so expect the GST component to go up even on “free” tickets.
That said, there’s a short window for travellers to beat the hike. Tickets booked before September 22 will still be taxed at the older 12% rate, even if the travel takes place later. If a premium cabin trip is on the horizon, now might be the best time to lock it in.
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