The International Air Transport Association (IATA) has stated that levy of goods and service tax on branch offices of foreign airlines in India is flawed and called for a clear and consistent policy in line with the global framework. Non-resolution of the issue could dampen and risk India’s aviation potential, it added.
Following the issue of GST notices to foreign airlines for non-payment of ₹10,000 crore tax, IATA said nowhere else in the world do airlines face this, and Indian carriers operating overseas do not face similar tax demands.
- Also read: IATA opposes GST levy on foreign airlines in India
“IATA is disappointed that India’s Directorate General of GST Intelligence (DGGI) has proceeded to issue show cause notices to some foreign airlines operating to India, despite a number of representations made by the industry on this matter. DGGI’s assertion that GST should apply to expenses incurred by the headquarters of foreign airlines (with a branch office in India) in the course of providing air transport services is flawed. It does not take into consideration the nature and conventions involved in the provision of international air transport. Furthermore India is alone in its approach — nowhere else around the world is this practised,” IATA’s regional vice president for North Asia and Asia Pacific Xie Xingquan said in a statement.
The global airline body said the international nature of air transport necessitates a clear and consistent policy framework globally. “IATA continues to work closely with the Government of India on this subject. IATA has also urged the government to urgently help resolve this matter, which can dampen and risk India’s strong aviation potential,” Xingquan said.
According to a media report, 10 foreign airlines were served notices over the past few days over import of services by Indian branch offices.
The notices are for the period from July 2017, when GST was rolled out, to March 2024, the report said.
Airlines are not covered by a June 26 circular on valuation of supply of import services by a related person, where the recipient is eligible for full input tax credit, it added.
