This circular provides clarification on the applicability of GST on airport levies, namely Passenger Service Fee (PSF) and User Development Fee (UDF), and on whether these charges form part of the taxable value of services provided by airlines.

It clarifies that PSF and UDF are statutory charges levied by airport operators for providing airport services to passengers. These charges constitute consideration for services provided by the airport operator and are therefore liable to GST in the hands of the airport operator. Airlines merely collect these amounts from passengers on behalf of the airport operator to ensure smooth airport operations.

The circular further clarifies that airlines act as a pure agent of the passengers while collecting PSF and UDF, subject to fulfilment of the conditions prescribed under rule 33 of the CGST Rules. Accordingly, PSF and UDF, along with applicable GST, should be shown separately in the ticket invoice. These amounts shall be excluded from the value of supply of airline services, and airlines are not required to pay GST on these levies, nor can they avail input tax credit of GST paid on them.

GST on PSF and UDF is payable by the airport operator, who collects these charges inclusive of tax through airlines. Collection charges paid by airport operators to airlines for this activity are consideration for services provided by airlines and are taxable under GST in the hands of airlines. This clarification ensures uniform GST treatment of airport levies across the industry.