ATA says taxation issues pose hurdles for foreign airlines
AVIATION & AIRPORTS

ATA says taxation issues pose hurdles for foreign airlines

The president of IATA warned that airlines would leave the Indian market if tax-related issues were not resolved in India. Over the past few months, the India offices of numerous multinational aircraft companies have received tax evasion alerts from the Directorate General of GST Intelligence (DGGI). Among other airlines, notice has been sent to British Airways, Lufthansa, and Emirates. Etihad Airways, Qatar Airways, Emirates, Singapore Airlines, Thai Airways, and Airlines of Saudi Arabia.

Wille Walsh, the director general of the International Air Transport Association (IATA), responded to a query from ET, stating that, as a consequence, there might be a withdrawal of these airlines from the Indian market. He explained that this withdrawal typically occurs gradually, with airlines reducing the number of flights due to its impact on profitability, eventually leading to a complete withdrawal. He made these remarks while speaking on the sidelines of the Annual General Meeting of IATA in Dubai. According to Walsh, notices were issued for non-payment of tax on services such as maintenance, crew payments, and aircraft lease rentals, which are provided by the airlines to their Indian entity. IATA, in its communication with the Indian government, argued that these services' place was both the head office and branch office, suggesting that airlines should only be liable to pay taxes on services taxable in India, like payments for hotel accommodation used by Indian staff outside of India.

A senior airline official clarified that when a foreign airline obtains permission to operate in India, the Directorate General of Civil Aviation (DGCA) grants permission to the global headquarters, not the local unit. Therefore, holding the airline liable for services is a legal grey area. The official mentioned that they have requested that the government suspend this.

IATA further stated that airlines' branch offices in India do not engage in crucial operations such as contracting for aircraft leases, crew, pilots, fuel, and maintenance. All operations to and from India are decided, controlled, and operated by airlines' head offices. Thus, attributing strategic and operational risks and functions to the branch offices in India is legally inaccurate, according to IATA.

Walsh expressed optimism about opportunities in the Indian aviation sector but emphasised that the government needs to implement the right policies to unlock the country?s potential. He highlighted the example of the Chinese market, which constitutes 12% of global aviation, indicating the potential for growth in India, contingent upon the government's policy decisions.

The president of IATA warned that airlines would leave the Indian market if tax-related issues were not resolved in India. Over the past few months, the India offices of numerous multinational aircraft companies have received tax evasion alerts from the Directorate General of GST Intelligence (DGGI). Among other airlines, notice has been sent to British Airways, Lufthansa, and Emirates. Etihad Airways, Qatar Airways, Emirates, Singapore Airlines, Thai Airways, and Airlines of Saudi Arabia. Wille Walsh, the director general of the International Air Transport Association (IATA), responded to a query from ET, stating that, as a consequence, there might be a withdrawal of these airlines from the Indian market. He explained that this withdrawal typically occurs gradually, with airlines reducing the number of flights due to its impact on profitability, eventually leading to a complete withdrawal. He made these remarks while speaking on the sidelines of the Annual General Meeting of IATA in Dubai. According to Walsh, notices were issued for non-payment of tax on services such as maintenance, crew payments, and aircraft lease rentals, which are provided by the airlines to their Indian entity. IATA, in its communication with the Indian government, argued that these services' place was both the head office and branch office, suggesting that airlines should only be liable to pay taxes on services taxable in India, like payments for hotel accommodation used by Indian staff outside of India. A senior airline official clarified that when a foreign airline obtains permission to operate in India, the Directorate General of Civil Aviation (DGCA) grants permission to the global headquarters, not the local unit. Therefore, holding the airline liable for services is a legal grey area. The official mentioned that they have requested that the government suspend this. IATA further stated that airlines' branch offices in India do not engage in crucial operations such as contracting for aircraft leases, crew, pilots, fuel, and maintenance. All operations to and from India are decided, controlled, and operated by airlines' head offices. Thus, attributing strategic and operational risks and functions to the branch offices in India is legally inaccurate, according to IATA. Walsh expressed optimism about opportunities in the Indian aviation sector but emphasised that the government needs to implement the right policies to unlock the country?s potential. He highlighted the example of the Chinese market, which constitutes 12% of global aviation, indicating the potential for growth in India, contingent upon the government's policy decisions.

Next Story
Equipment

Godrej Material Handling Leads East India with 21% Market Share

The Material Handling business of Godrej & Boyce, a part of Godrej Enterprises Group, is powering industrial growth in Eastern India marking over 60 per cent Y-o-Y growth in the Jamshedpur region for FY25. Solidifying its market leadership, the business commands a dominant 21 per cent market share in the Eastern region, serving as a crucial enabler for the region’s manufacturing sector. At the Indomach Expo in Jamshedpur, the business is showcasing its next-generation forklift to meet evolving needs of Eastern India’s industrial corridor. Jamshedpur, Eastern India’s industrial po..

Next Story
Equipment

Mecbo America Launches Scorpion Concrete Crawler Boom

Mecbo America, a division of Blastcrete Equipment LLC, brings a new product to its lineup: the Scorpion Concrete Crawler Boom. The Scorpion provides contractors working in piling, drilling, tunnelling or commercial construction with a flexible arm for placing concrete where needed without disrupting the jobsite. It is an economical enhancement for contractors who have a concrete pump but need an effective way to deftly move material to spots that are difficult or unsafe to reach using other methods.“As concrete contractors grow and the scope of their work changes, many recognize the need for..

Next Story
Infrastructure Urban

REC Flags off Mobile Medical Units Funded in Punjab

REC Limited, a Maharatna CPSE under the Ministry of Power and a leading NBFC, under its flagship CSR initiative Mobile Medical Units has committed Rs 42.9 million for the procurement and deployment of four Mobile Medical Units (MMUs) in 4 districts of Punjab. These units, handed over to the Indian Red Cross Society, Punjab, were flagged off by Hon’ble Governor Shri Gulab Chand Kataria Ji at Punjab Raj Bhawan.Serving as a lifeline for deprived communities, the MMUs will provide essential healthcare across four districts. REC Foundation continues to expand its CSR footprint, with various Mobil..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?