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
Infrastructure Urban

VECV to Manufacture Volvo Group’s Advanced AMTs in India

VE Commercial Vehicles (VECV), a joint venture between Volvo Group and Eicher Motors, announced an investment of Rs 5.44 billion to produce and assemble Volvo Group’s 12-speed Automated Manual Transmission (AMT). The greenfield facility will be set up at Vikram Udyogpuri Integrated Industrial Township near Ujjain, Madhya Pradesh, and will cater to India and select Asia-Oceania markets.This investment marks a new milestone in the 18-year VECV-Volvo collaboration, which has already made VECV a global hub for Volvo Group’s 5 & 8 Litre (MDEP) engines since 2013, reinforcing the Make in Ind..

Next Story
Products

Action TESA Drives Shift from Plywood to Engineered Wood Solutions

Action TESA, a leading player in India’s panel industry, is spearheading the market transition from traditional plywood to engineered wood solutions such as Moist Master, HDHMR, and Boilo. These high-performance boards are redefining modular furniture, kitchen, and decorative applications with superior durability, design flexibility, and finish quality.Engineered wood offerings from Action TESA provide consistent quality, dimensional stability, and smooth surfaces, unlike plywood, which can have knots or gaps. The Moist Master, HDHMR, and Boilo BWP FR boards ensure excellent machinability, m..

Next Story
Infrastructure Urban

CREDAI-MCHI Donates Rs 30.65 Mn for Maharashtra Flood Relief

CREDAI-MCHI, the apex body of real estate developers in the Mumbai Metropolitan Region, has extended Rs 30.65 million to the Chief Minister’s Relief Fund to support rescue and rehabilitation efforts in flood-affected areas of central Maharashtra and neighbouring regions.The contribution was presented to Chief Minister Devendra Fadnavis by Sukhraj Nahar, President, and Rushi Mehta, Secretary, CREDAI-MCHI, in the presence of several leading developers from the Mumbai Metropolitan Region.A total of 44 member developers participated in this collective effort, underlining the real estate industry..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?