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📚 Learn/ / TAX - GST Exemptions
Microlesson · 5-min read

Passenger Transportation Service Exemptions (Entries 15, 16, 17)

# Passenger Transportation Services — Exemptions

## Entry 15 — Specific Modes

Transport of passengers (with or without accompanied belongings) by:

(a) Air, in economy class, embarking from or terminating in airports located in:

  • Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, OR
  • Bagdogra (West Bengal)

(b) Non-air-conditioned contract carriage (other than radio taxi), excluding tourism / conducted tour / charter / hire;

(c) Stage carriage other than air-conditioned stage carriage.

⚠️ Override for ECO: Items (b) and (c) NOT applicable if services supplied through an Electronic Commerce Operator (ECO) notified under Section 9(5) of CGST Act — ECO must pay tax.

### Key Definitions

  • Conducted Tour: A short visit where a guide provides information about the place.
  • Contract Carriage [Sec 2(7), Motor Vehicles Act]: Motor vehicle hired under contract for fixed/agreed rate (by time, route, or distance), without picking/setting down non-included passengers. Includes maxi cabs and motor cabs.
  • Radio Taxi: Taxi (or radio cab) in two-way radio communication with central control office and enabled for GPS/GPRS tracking.
  • Stage Carriage [Sec 2(40), Motor Vehicles Act]: Motor vehicle for more than 6 passengers (excluding driver) for hire/reward at separate fares for individual passengers.

### Important Rule — Contract Carriage Hiring by Firms

  • Exemption applies to passenger transport by non-AC contract carriage with pre-determined route and schedule.
  • Exemption does NOT apply when contract carriage is hired for a period of time with the vehicle at the recipient's disposal (route/schedule flexibility).

## Entry 16 — Regional Connectivity Scheme (RCS) Airports

Services to Central Government for transport of passengers by air, embarking from or terminating at an RCS airport, against consideration in form of Viability Gap Funding (VGF).

Sunset: Exemption ends after 3 years from the date of commencement of operations of the RCS airport, as notified by Ministry of Civil Aviation.

### About RCS

  • Promotes regional air connectivity via concessions from CG/SG and airport operators + VGF.
  • Underserved airports connected at affordable fares of approximately Rs. 2,500 per hour.

## Entry 17 — Other Modes

Transport of passengers (with/without accompanied belongings) by:

(a) Railways in a class OTHER than first class or air-conditioned coach;

(b) Metro, monorail, or tramway;

(c) Inland waterways;

(d) Public transport (other than predominantly for tourism) in a vessel between places located in India;

(e) Metered cabs or auto rickshaws (including e-rickshaws).

⚠️ Override for ECO: Item (e) NOT applicable if services are supplied through an ECO notified under Section 9(5) — ECO must pay tax.

### Important Definitions

  • Metered Cab: Contract carriage with automatic fare-reading device approved by State Transport Authority (excludes radio taxis).
  • E-rickshaw: Battery-powered (< 4000 watts) 3-wheeled vehicle for goods/passengers for hire, meeting prescribed specs.

### Clarification on Entry 17(d) — Public Transport by Vessel

  • 'Public transport' = transport open to public (private or public ownership both covered).
  • Exempt: Even if some passengers happen to use it for tourism, so long as service is NOT predominantly for tourism (e.g., Kolkata–Port Blair, inter-island Andaman vessels).
  • NOT exempt: Leisure / charter / cruise ships predominantly for tourism (sightseeing, food, music, accommodation like shikaras or cruises).

Worked example

### Example 1

Example 1 — North-East air travel: A passenger flies economy class from Mumbai to Guwahati. Taxability?

Solution: EXEMPT under Entry 15(a). Service is economy class air travel terminating in Assam (a notified state).

### Example 2

Example 2 — Business class to North-East: Same flight but in business class.

Solution: NOT exempt. Entry 15(a) specifically applies to economy class only.

### Example 3

Example 3 — Office bus contract: A factory hires a non-AC bus for employee transport on a fixed daily route. Taxability?

Solution: EXEMPT under Entry 15(b). Non-AC contract carriage with pre-determined route and schedule.

### Example 4

Example 4 — Bus at recipient's disposal: Company hires a non-AC bus for a month with full flexibility on route and schedule.

Solution: NOT exempt. The recipient has flexibility over schedule/route, so the service does not qualify under Entry 15(b).

### Example 5

Example 5 — Ferry to Andaman: A vessel transports passengers from Kolkata to Port Blair (mainland-to-island). Some passengers are tourists. Exempt?

Solution: EXEMPT under Entry 17(d) — public transport not predominantly for tourism, even if some passengers happen to be tourists.

### Example 6

Example 6 — Luxury cruise: A luxury cruise from Mumbai to Goa providing sightseeing, music, food, and accommodation. Exempt?

Solution: NOT exempt. The cruise is predominantly for tourism — excluded from Entry 17(d).

⚠️ Common exam mistakes

  • Treating ALL air travel to North-East as exempt — only ECONOMY class is exempt, business/first class is taxable.
  • Forgetting that auto-rickshaws/metered cabs/non-AC contract carriages booked via aggregator apps (Ola, Uber etc.) notified under Section 9(5) are NOT exempt — the ECO must pay tax.
  • Treating AC stage carriage as exempt under Entry 15(c) — only non-AC stage carriages are exempt.
  • Confusing 'public transport by vessel' (exempt under 17(d)) with leisure cruises (NOT exempt) — the predominant tourism test is decisive.
  • Mistaking First Class / AC Coach rail travel as exempt — Entry 17(a) excludes first class and AC coaches.
Reference: Entries 15, 16, 17 — Notification No. 12/2017-CT(R) dated 28.06.2017
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