IATA Says Probe On Foreign Airlines Unprecedented

IATA has raised concerns about India probing some foreign airlines with respect to certain charges related to Goods and Services Tax (GST). The Directorate General of GST Intelligence (DGGI) has started probes against some of the foreign airlines having operations in India.

What IATA Said

IATA country director for India Amitabh Khosla said that for now, 10 foreign airlines have been picked up for investigation and that the move was “unprecedented”. The International Air Transport Association (IATA) has submitted a detailed representation to the Indian government on the issue, he told PTI.

The airlines have been receiving notices since October 2023. It is not clear which are the foreign airlines who have received notices from the GST.

Xie Xingquan, Regional Vice President, North Asia and Asia Pacific (ad interim), also mentioned about the GST issue at the briefing on the sidelines of the IATA annual general meeting.

The Problem

The authority is interpreting the application of the local GST law with respect to the alleged import of service from the head office of foreign airlines in relation to aircraft services made available to the branch office in India.

The costs include those related to aircraft rental, crew and pilot, and maintenance costs. Such costs would need to be cross-charged to the Indian branch so as to be liable to GST under reverse charge.

“Airline’s branch offices in India do not play any role in the crucial operations such as contracting for aircraft leased, crew and pilots, fuel and maintenance costs. All the operations to and from India are decided, controlled and operated by the airlines’ head offices and it is not legally accurate to attribute any strategic and/or operational risks and functions to the branch offices in India,” IATA said.