Wednesday, March 07, 2018

Business, aviation sector feels GST drag

Hyderabad: The indirect cost on rental services of aircraft has increased from 15 per cent to 18 per cent, which leads to more burden on end consumers, according to the Business Aircraft Operators Association (BAOA).

A report commissioned by the association, in partnership with the consultancy firm Deloitte Haskins & Sells, highlights that the working capital requirement would increase because of the 5 per cent GST on import of aircraft for purchase as well as for lease.

However, Saloni Roy, Senior Director, Deloitte Haskins & Sells, said the benefit of GST paid on services will now be available, which was not possible earlier.

Mentioning some of the issues faced by BAOA, the report said the GST law has not defined the terms such as ‘economy class’ and ‘other than economy class’. While the economy class attracts 5 per cent GST, the other than economy attracts 12 per cent. Hence, there was a need to bring about a clear distinction between the two cases under the law.

The import of aircraft for ‘personal use’ attracts 28 per cent GST and a compensation cess of 3 per cent. However, the term personal use has not been dealt in the GST law.

Rohit Kapur, President, BAOA, said that even though the business aviation sectorhas huge potential, it has passed through tough times. The general and business aviation sector has seen zero and negative growth up to 2012-13 from 2008. “Now we are a witness to a low single-digit growth,” he said.
07/03/18 Business Line