Supreme Court Clears the Path for VAT on Airline Tickets

The path to levy Value Added Tax (VAT) on airline company tickets has been cleared as the Supreme Court has ordered the discontinuation of the previous short-term interim order that prohibited the imposition of VAT on airline tickets.

On Friday, the joint bench of Supreme Court Justices Ishwar Prasad Khatiwada and Sushmalata Mathema issued an order stating that the previous short-term interim order should not be continued.

Following the government's announcement through the budget speech to impose a 13 percent VAT on airline tickets, business interests filed a petition in the Supreme Court, seeking an order to prevent the implementation of this provision. In response to this writ, the Supreme Court had ordered the immediate execution of the decision on the 14th of Shrawan 2080.

However, the Director General of the Inland Revenue Department (IRD), Dirgha Raj Mainali, submitted a petition to the Supreme Court on Shrawan 28, 2080, requesting the cancellation of the short-term interim order on behalf of the IRD. After discussions with both parties, the Supreme Court issued a new order, clarifying that the order dated the 14th of Shrawan 2080 would not be upheld.

As a result, the path is now clear for the application of VAT to airline tickets, which will lead to a slight increase in airfares.