The panel suggested GST exemptions for foreign airlines

A panel of officials has recommended that the GST Council grant tax exemption to foreign airlines for some services imported from their overseas branches or related entities where no mandatory transaction is involved.

This proposal, which emerged after extensive discussions by the fitment committee, could provide a prominent relief to foreign airlines currently facing tax demands from the Directorate General of GST Intelligence. Initially, it was believed that foreign airline Indian branches were required to pay an 18% tax on these imported services under teh reverse charge mechanism outlined in Section1 5 of the CGST Act 2017.

This interpretation classified any service imported by an airline's Indian branch from its head office or related entities abroad, even without payment, as a taxable supply. However, after airlines clarified that their head offices cover all costs related to aircraft leases, fuel, maintenance and other operational expenses for international flights, the committee recommended these airlines from additional taxes.

The Ministry of Civil Aviation was also consulted on the matter, leading to a decision that this exemption would apply to services offered by a foreign airline Indian establishment from related entities abroad, provided the airline has already paid GST on the transportation of goods and passengers within India. Notable foreign airlines, including Finnair KLM Royal Dutch Airlines, Qatar Airways, Virgin Atlantic, Etihad and Emirates, and shipping lines like Saudi Airlines and Air Arabia, have been issued GST notices concerning these imported services.

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The Panel Suggested GST Exemptions For Foreign Airlines On Specified Imported Servicesz

News Source : TravelBizMonitor.com