GST PANEL RECOMMENDS TAX EXEMPTION FOR FOREIGN AIRLINES
A panel of officials has recommended that the GST Council exempt foreign airlines from paying taxes on certain services imported from their overseas Indian branches or related entities, when no payment is involved.
This recommendation comes after extensive discussions by the fitment committee and could provide significant relief to foreign airlines that have received tax notices from the Directorate General of GST Intelligence (DGGI).
Initially, it was believed that branch offices of foreign airlines in India were required to pay 18 per cent tax on these imported services under the reverse charge mechanism, as outlined in Section 15 of the CGST Act, 2017. This meant that any service imported by an airline’s branch from its head office or related entities abroad, even without payment, would be treated as a taxable supply.
However, after foreign airlines clarified that their head offices cover all expenses related to aircraft leases, fuel, maintenance, and other operational costs for international flights, the committee suggested that these airlines could be exempted from additional taxes.
The Ministry of Civil Aviation was also consulted on this matter. Accordingly, the panel decided that the exemption would apply to services imported by a foreign airline’s establishment in India from related entities abroad, provided that the airline has already paid the applicable GST on the transportation of goods and passengers within India.
Several foreign airlines, including Finnair, KLM Royal Dutch Airlines, Qatar Airways, Virgin Atlantic, Etihad, and Emirates, as well as shipping lines like Saudi Airlines and Air Arabia, have been issued GST notices for non-payment of taxes on these imported services.
2024-09-03T04:29:19Z dg43tfdfdgfd