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 Transport

Railways To Operate Over 300 Special Trains For Rath Yatra

Union Railway Minister Ashwini Vaishnaw announced that Indian Railways (IR) will operate more than 300 special trains for the annual Jagannath Rath Yatra in Odisha and over 100 special trains during the Onam festival in Keralam. He flagged off the Nanded–Mumbai and Tanakpur–Nanded Express trains and inaugurated the extension of the Tanakpur–Pilibhit service up to Shahjahanpur via video conference from Rail Sadan in Bhubaneswar. He noted that the summer season, which concluded on 30 June, had seen a record 15,000 special trains. Vaishnaw stated that the newly launched services are intende..

Next Story
Infrastructure Transport

Vande Bharat Express To Start From Tripura Soon

Tripura Chief Minister Manik Saha said the Vande Bharat Express will commence operations from Tripura in the coming days after he flagged off the Agartala–Karimganj MEMU service at Agartala Railway Station. He recalled the rail history of the state, noting that a metre-gauge service first arrived in 1964 and that broad gauge reached Agartala in 2008 following national projects and later upgrades under the Act East policy. The event was described as a milestone for regional connectivity and the MEMU was presented as the first electric passenger train to originate from Tripura.\n\nSaha said he..

Next Story
Infrastructure Urban

MEMU Suspension Disrupts Commuters Between Vadodara And Dahod

The Vadodara–Dahod Mainline Electric Multiple Unit (MEMU) service has been temporarily suspended for 26 days after its rake was diverted to Odisha to manage the surge in passenger traffic during the annual Rath Yatra in Puri. Indian Railways redeployed several MEMU rakes from different zones to meet the additional travel demand for the festival scheduled from the seventh of July to the second of August. As a result, train numbers 69233 and 69234 operating between Vadodara and Dahod will remain cancelled for the duration. Railway authorities advised passengers to use alternative train service..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement