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.

Related Stories

Gold Stories

Next Story
Infrastructure Energy

Asian Energy Services Q1 FY27 PAT Rises 129 Per Cent

Asian Energy Services Limited reported a 129 per cent year-on-year rise in net profit to Rs 128 million for Q1 FY27, compared with the corresponding quarter last year.Revenue increased 135 per cent year-on-year to Rs 2.71 billion, supported by continued momentum across its services business, disciplined execution and contributions from domestic and international operations. EBITDA grew 81 per cent year-on-year during the quarter.As of June 30, 2026, the company’s standalone order book stood at Rs 17.54 billion, with around 60 per cent coming from oil and gas services and 40 per cent from min..

Next Story
Infrastructure Urban

BioBTX to Build First Commercial-Scale Circular Chemicals Plant

Dutch circular chemistry technology developer BioBTX is building what it says will be the world’s first commercial-scale plant to convert mixed plastic waste into high-quality aromatic chemicals using its proprietary Integrated Catalytic Cracking Process (ICCP) technology.The facility will be built at Chemical Park Delfzijl on the northern coast of the Netherlands and is expected to create 35 jobs. Covestro, which has been a shareholder and strategic partner of BioBTX since 2024, holds a mid-single-digit million-euro investment in the company.BioBTX’s ICCP technology uses catalytic pyrolys..

Next Story
Real Estate

Awfis Q1 FY27 PAT Jumps 140% as Revenue Rises 27%

Awfis Space Solutions reported a 140 per cent year-on-year rise in consolidated profit after tax (PAT) to Rs 240 million for Q1 FY27, compared with Rs 100 million in the corresponding quarter last year.Revenue from operations increased 27 per cent to Rs 4.25 billion from Rs 3.35 billion, while EBITDA rose 28 per cent to Rs 1.62 billion. EBITDA margin improved to 38.2 per cent from 37.8 per cent. Profit before tax increased 135 per cent to Rs 240 million.The company's co-working business recorded 27 per cent year-on-year growth, supported by demand from enterprises, Global Capability Centres (G..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement