Caladrius Aero Consulting LLP’s Post

GST relief to #foreignairlines is definitely in sight as the  panel of officials has recommended that the GST Council exempt #foreignairlines from paying taxes on certain services imported from their overseas Indian branches or related entities, when no #payment is involved. This #recommendation comes after extensive #discussions by the fitment committee and could provide significant relief to foreign airlines that have received tax notices from the directorate general of gst intelligence (#DGGI) Initially, it was believed that branch offices of #foreignairlines in India were required to pay 18% tax on these #importedservices under the reverse charge mechanism, as outlined in Section 15 of the CGST Act, 2017. This meant that any service imported by an airline’s branch from its head office or related entities abroad, even without payment, would be treated as a taxable supply. However, after foreign airlines clarified that their head offices cover all expenses related to aircraft #leases, #fuel, #maintenance, and other #operationalcosts for international #flights, the committee suggested that these airlines could be exempted from additional taxes. Government of India Official Narendra Modi NITI Aayog Official Indian Ministry of Finance Customs & Central Excise Department, Ministry of Finance, Government of India Ministry of Commerce and Industry, Government of India Ram Mohan Naidu Kinjarapu Nirmala Sitharaman Lufthansa British Airways Qatar Airways Etihad Emirates Saudia Cargo Finnair KLM Royal Dutch Airlines Virgin Atlantic Rohit Tomar Seemaa S Vedaak Veena Chawla Rinaldo Rhine #taxes #rules #regulations #regulatoryauthority #taxexemption #MRO #leasing #fuelcharge #ATF

❓ Why Global airlines might withdraw from India due to its tax system? 👉 Recently the International Air Transport Association (IATA) warned that the complexities of India's tax system could drive away Global airlines from the world's third-largest aviation market. 👉 This is because the Directorate General of GST Intelligence had issued summons to foreign airlines for alleged tax evasion for import of services by airlines in India. 👉 This year, the DGGI summoned the Indian staff of Thai Airways, Singapore Airlines, Lufthansa and British Airways, among others, over allegations of non-payment of goods and services tax (GST). 👉 According to the agency, services like aircraft maintenance, rentals and crew salaries, overseen by an airline's overseas headquarters, are subject to GST in India. 👉 However the IATA is of the view that Airline’s branch offices in India do not play any role in the crucial operations such as contracting for aircraft leased, crew and pilots, fuel and maintenance costs. Hence the GST levy is improper. 👉 This has led IATA to remark that India's tax system would actually lead to airlines withdrawing from the market because (they would be exposed to) the complexity of tax rules, the extent of taxes, and the risk of double taxation, which most air service agreements set out to avoid. 👉 If Global airlines start withdrawing there could be massive impact on the Indian Aviation sector. According to 2022-23 data from Directorate General of Civil Aviation (DGCA), foreign carriers dominated international air traffic to and from India, with a 56% share, while Indian carriers accounted for 44%. #Indiantaxes #taxlaw #DGCA #globalairlines #IATA #Aviation #taxation #GST

The IATA highlights high taxes and insufficient infrastructure as major hurdles for Indian airlines, impacting competitiveness and growth. To address this: 1. Reduce ATF Taxes 2. Expand Infrastructure 3. Simplify Regulations 4. Promote Strategic Mergers 5. Adopt Innovative Pricing These reforms are crucial for leveraging India's booming aviation market. #Aviation #India #IATA #Infrastructure #TaxReform #Growth

India may soon exempt foreign airlines from paying goods and services tax (GST) on services provided by their head offices to their Indian branches. This comes after the government received notices from the Directorate General of GST Intelligence (DGGI) for non-payment of tax on import of services by Indian entities from their head offices. The fitment committee under the GST Council is currently examining the issue and is likely to recommend exempting airlines from paying GST on these services. This would provide relief to airlines and shipping companies, which have also received similar notices. The industry has argued that GST should not be levied on services provided outside India. They also say that it is difficult to segregate the cost of common services provided by head offices to their branches. The government is yet to take a final decision on the matter, but the overall view is leaning towards exempting foreign airlines from paying GST on these services. #GST #aviation #foreignairlines #India BhaSha Advisors

The CBIC (Central Board of Indirect Taxes and Customs) has stated that foreign airline companies will be exempted from paying GST (Goods and Service Tax) on services imported from their offshore branches. The circular issued in this regard follows a recommendation made by the GST Council on September 9th, 2024. Experts believe this decision would be welcomed by the global airlines industry. However, whether the notification is applicable for the previous period is still unclear. In a meeting held in September , the council recommended to regularise taxation of past transactions on an 'as is where is' basis, where the past transactions will be addressed exactly as they are. The rules have been implemented and are in effect since October 10th, 2024. However, the GST must be paid at the relevant rates by foreign airline companies established in India to transport goods and passengers, where applicable. A certificate will also be required to state that the foreign aviation company has established itself in India under terms and conditions agreed by the foreign Government under the bilateral air services agreement with India. The certificate will also mention that, in return, Indian airline companies won't have to levy similar taxes by the Government of the country designating the foreign airline company. Read more about CBIC exempting foreign airlines from GST for service imports in this article: https://lnkd.in/gPaXSWT4 #airline #airlinecompanies #CBIC #GST #goodsandservicetax #taxation #serviceimports

The Directorate General of Goods and Services Tax Intelligence (#DGGI) has issued show cause notices to ten #foreignairlines operating in India for allegedly evading taxes amounting to Rs 10,000 crore. As per the reports the airlines are #BritishAirways, #Lufthansa, #OmanAir, #Emirates, and #SingaporeAirlines. The officials stated that the notices, sent over the last three days, pertain to unpaid taxes on services imported by Indian branches from their respective head offices. It was reported that #airlines are excluded from a June 26 circular regarding the valuation of supply of imported services by a related party when the recipient is entitled to a full input tax credit. This circular was referenced by #Infosys. The DGGI had previously requested a detailed list of exempt and non-exempt services from airlines, the report said. The report cited the official as saying, “Of the ten, only four airlines provided the list and the rest failed to furnish any explanation." The notices cover the timeframe from July 2017, when #GST was implemented, to March 2024. The #overseas headquarters of these airlines have been handling services like #aircraftmaintenance, #crewpayments, and #rentals. The DGGI asserts that they are subject to GST, which the airlines have not remitted. Foreign airlines contended that GST should only be applied to taxable services within #India, given that the place of service included both the head office and branch office. They also reached out to their respective #embassies. As a result, the matter was referred to the GST Council's fitment committee. The council subsequently approved a circular on June 26, which clarified the valuation of the "supply of import of services" by a related person.

In a significant move for the airline industry, Government of India Official is considering exempting #services provided between the head offices and local branches of #foreignairlineoperators from the #goods and #services tax (#GST). Foreign airlines with offices in India have been issued #GSTnotifications for not paying #taxes on #services imported by #Indianentities from their headquarters. The issue has been brought before the #fitmentcommittee within the #GSTCouncil, and there is a growing #inclination towards granting #taxexemption. A definitive decision will be made following the committee’s examination. Last year, notices were sent to 12 #foreignairlines regarding the imposition of GST on services imported by Indian branch offices. The #headquarters of #airlines cover #expenses such as #maintenance, #crewpayments, and #rentalcosts, and #taxauthorities claim these services are subject to #taxation in India. Foreign airlines have informed the #government that they should only be responsible for taxes applicable within India. Similarly, certain #shippingcompanies have also been served with comparable notices. Goverment of India Initiatives on Ease of Doinng Business Ministry of Commerce and Industry, Government of India Narendra Modi Jyotiraditya M Scindia Rohit Tomar Seemaa S Vedaak Veena Chawla Rinaldo Rhine #taxes #policies #easeofdoingbusiness #aviationsector #airlines #reforms #development #investment #

𝐅𝐨𝐫𝐞𝐢𝐠𝐧 𝐚𝐢𝐫𝐥𝐢𝐧𝐞𝐬 𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚 𝐰𝐢𝐥𝐥 𝐧𝐨𝐭 𝐛𝐞 𝐥𝐢𝐚𝐛𝐥𝐞 𝐭𝐨 𝐆𝐒𝐓. Foreign airlines in India will not pay #GST on services from head offices to branch offices. Academic institutions with research grants are exempt from GST. The rules start from October 10. Penalties and interests waived for taxpayers complying by March 31, 2025. Taxpayers can correct past input tax credit mistakes through a special window. Foreign airlines operating in India will not be liable to goods and services tax (GST) on services provided by the head office to a branch office, according to a government notification. Academic institutions that have received grants for research will also be exempt from GST, as per another notification. The Central Board of Indirect Taxes & Customs (CBIC) issued several notifications to implement decisions taken at the 54th GST Council meeting. The new rules will be effective from October 10. Read more :- https://lnkd.in/gSmG_rcr

When any airline or any other overseas entity is not properly advised things are bound to be bad. The cost of tax compliances or noncompliance(s) and the consequences thereof are bound to hit the bottom line of the balance sheets real hard and erode profitability. I have seen such instances during service tax regime and even saved quite a few overseas clients from embarrassing situations and brought value addition on table. GST is combination of Central Sales Tax Act, State Sales Tax Acts predominantly borrowed from erstwhile Punjab General Sales Tax Act, and West Bengal Sales Tax Act, which were the virtually followed by all States, Valuation borrowed from Customs Act, blended with provisions of Chapter V of Finance Act, 1994 (Service Tax). Barring a few legal luminaries and professionals, many professionals grew after introduction of Service Tax, which was easy enactment, made complex by design, hence are still struggling with GST.

In an interesting development, #foreignairlines in India are likely to get tax relief on import of #maintenance, #repair and #overhaul (MRO) services from the current 18%. When airlines import #MROservices from their parent company outside India, under #GST, the related party transaction is taxable at 18% and its compliance is very stringent for #foreigncompanies. For ease of doing business, the fitment committee has suggested giving tax relief, which will be discussed by the #GSTCouncil in the June 22 meeting. As per #GSTlaws, related party #transaction refers to the transfer of #goods or #services between entities under common #ownership or #management. The Council is likely to relax the payment rule of #GST for the import of #MROservices. Instead of making the payment at the time of import of services, the #subsidiarycompanies will be allowed to make the #payment at the time of discharge of #services. Currently, if a #subsidiary Indian company is importing services from the parent company and does not pay #GST on it, the tax authorities detect it and send a #demandnotice. The deemed supply is taxable at 18%, for which input tax credit may be received later at the time of further supplies by the company. The Council is likely to discuss that if the Indian company is not paying #GST on the import of services, and is paying the entire #tax later at the time of supply of services, the tax department should not bother. The #GSTauthorities had sent several notices to all airlines that have parent companies outside India for non-payment of GST on import of services. All foreign airlines including Finnair, KLM Royal Dutch Airlines, Qatar Airways, Virgin Atlantic, Etihad, Emirates, SAUDI AIRLINES, Air Arabia, Oman Air, Kuwait Airways and British Airways and #shippinglines have received GST notices in this regard. Government of India Official NITI Aayog Official Income Tax India Official Narendra Modi Ram Mohan Naidu Kinjarapu Rohit Tomar Seemaa S Vedaak Veena Chawla Rinaldo Rhine #goodsandservicetax #policyframework #MRO #maintenance #repair #overhaul #import #componentexport #servicetax #taxregime