Wednesday, July 05, 2017

No credit set-off in GST, airlines see red

Mumbai: The 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, industry officials said. It could also lead to an increase in airfares.

Under GST, there is a levy of 5% on import of aircraft.

"Industry is discussing with the civil aviation ministry for exemption of tax on imports. We will also have to pay 5% GST on lease rentals available for credit set-off," said Amar Abrol, MD of CEO, AirAsia India. "Only GST paid on services is available for credit set-off; GST paid on purchase/import of goods is not available," he said.

The airline industry has approached the civil aviation and finance ministries in this regard. As per an estimate, the airline would have to pay about Rs 10-12 crore per aircraft import as GST levy.

The development seems significant, as Indian airlines have over 1,000 aircraft on order and the country is set to become the third-largest buyer of commercial passenger planes in the world, behind only the US and China. A recent report released by aviation consultancy firm CAPA states for every aircraft in service, there are 2.2 aircraft on order. There are around 480 aircraft in the country at present.
05/07/17 Shahkar Abidi/DNA