IATA : GST notices to foreign airlines could “dampen India’s aviation potential”

MONTREAL : The global trade body for airlines has expressed its “disappointment” over show-cause notices to 10 international airlines over GST dues of ₹10,000 crore, which it has called “flawed”. It has warned that the move could “dampen and risk India’s strong aviation potential”. International Air Transport Association (IATA) represents more than 330 airlines, including Indian carriers, and its members account for more than 80 per cent of the global air traffic.

The Directorate General of Goods and Services Tax Intelligence (DGGI) has sent show-cause notices to 10 foreign airlines offering flights to the country for alleged non-payment of tax amount to ₹10,000 crore for providing services such as aircraft maintenance, as well as payments for crew and rentals from their headquarters to their unit in India. The airlines include British Airways, Lufthansa, Oman Air, Emirates and Singapore Airlines.

Urging the government to resolve the matter, the International Air Transport Association (IATA) said it is disappointed 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.

“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,” Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia Pacific (ad interim), said in a statement.

He also said India is alone in its approach and that nowhere else around the world is this practised. “Indian carriers operating to destinations outside India do not face similar situations or demand,” he added. As many as 10 foreign airlines are under the scanner of DGGI and the carriers received notices since October 2023. IATA had also submitted a detailed representation to the Indian government on the matter.

“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,” Xie Xingquan said.

At a briefing in Dubai in June, IATA Country Director for India Amitabh Khosla had said that for now, 10 foreign airlines have been picked up for investigation and the move was “unprecedented”.

The statement from IATA also comes at a time when concerns have been expressed over GST demand received by IT major Infosys.

On August 1, apex IT body Nasscom said 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.