The global airlines’ grouping, International Air Transport Association (IATA) urged the government to resolve the issue regarding the 10 foreign carriers facing GST demands worth over Rs 10,000 crore, saying the matter can dampen and risk the country’s strong aviation potential on Tuesday.
How Did This Happen?
When it comes to IATA, it represents more than 330 airlines which includes Indian carriers, and its members account for more than 80 percent of the global air traffic.
As per this development, the show cause notices for GST demands worth over Rs 10,000 crore have been issued to ten foreign carriers operating to India.
According to IATA, it is disappointing that the 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 while urging the government to resolve the matter.
The IATA’s Regional Vice President for North Asia and Asia Pacific (ad interim), Xie Xingquan said, “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,” in a statement.
Further adding that India is alone in its approach and that nowhere else around the world is this practiced.
Xie Xingquan said, “Indian carriers operating to destinations outside India do not face similar situations or demand.”
It appears that almost 10 foreign airlines are under the scanner of DGGI and the carriers have received notices since October 2023.
Lack Of Understanding Of Industry’s Operating Model
In this regard, IATA had submitted a detailed representation to the Indian government.
Further, Xie Xingquan added, “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.”
For now, 10 foreign airlines have been picked up for investigation and the move was “unprecedented”, said Amitabh Khosla, IATA Country Director for India, At a briefing in Dubai in June.
Interestingly, this statement from IATA comes at a time when concerns have been expressed over GST demand received by IT major Infosys.
The latest tax demand reflects a lack of understanding of the industry’s operating model and sheds light on sector-wide issues wherein multiple companies are facing avoidable litigation and uncertainty, siad apex IT body Nasscom on August 1.
