Airlines have asked the government to set the goods and services tax (GST) at 15% and retain existing tax exemptions to avoid fare hikes as per a report in Mint.

GST, which aims to economically unify the country, will subsume most of the indirect taxes levied by the centre and the states including excise duty, service tax, value-added tax, entertainment tax and luxury tax. The tax is expected to be implemented next year.

The current rate of service tax is 14% and adding Swachh Bharat Cess and Krishi Kalyan Cess, airlines pay 15% tax.

“Under no circumstance should GST exceed 15%,” said an airline official, who did not wish to be named, referring to the submission made to the government last week. “It would hamper growth in the fastest growing aviation market in the world.”

Airlines expect a 9-15% increase in airfares if the GST is set higher. A group of airline officials met state finance ministers and aviation ministry officials last week to convey the implications of the new regime to the sector.