Thursday, July 13, 2017

GST clarification set to ease flight disruptions

The government's clarification that goods and services tax would not be applicable on imports of aircraft has eased the supply of spare parts for IndiGo's many A320 neo planes that have Pratt & Whitney engines.

The spare parts supply-hit had resulted in the grounding of such planes and rescheduling of many flights.

The government last week clarified that the airlines need not pay taxes on import of aircraft and engines taken on lease, provided GST was already paid on lease rentals. Aviation industry insiders said the situation is expected to improve now. It could not be ascertained whether GoAir is facing similar grounding of its A320 neo planes.

An IndiGo spokesperson told media that while this has caused operational disruptions both Pratt & Whitney and Airbus were working to address the issues and continue receiving the necessary operational and technical support including the provision of spare engines to help mitigate the operational impact.

The airline industry had written to the civil aviation and finance ministry earlier claiming that domestic airline industry is being double-taxed under the newly introduced goods and services tax (GST), which, if not corrected by the government, could lead to a loss of over Rs 400 crore per annum to the airlines collectively. Under GST, there is a levy of 5% on import of aircraft.
13/07/17 DNA