Lakshmikumaran and Sridharan attorneys’ Post

❓ Can Airlines rightfully retain taxes, such as GST, when a passenger misses their flight? 👉 This very question will now be investigated by the Directorate General of Goods and Services Tax Intelligence (DGGI). 👉 The DGGI has initiated investigations into airlines retaining taxes collected from customers in cases of no-show by passengers. 👉 The sale of airline tickets is subject to GST, with economy class tickets taxed at 5% and business class tickets at 12%. 👉 However, concerns have been raised regarding the taxation of consideration collected from passengers who do not avail of the airline service due to a no-show scenario. 👉 The debate continues on whether airlines should refund GST collected from no-show passengers, sparking discussions on the appropriate tax rate for consideration retained in such cases. More info in the link below! #DGGI #GST #noshow #passengers #Indianairlines #taxes #investigation #taxrefund

Grounded Aspirations: GST Council Rejects Aviation Fuel Proposal – What's Next for Airlines?" The aviation industry’s long-anticipated dream of having Aviation Turbine Fuel (ATF) under the unified Goods and Services Tax (GST) regime has been turned down by the Indian government panel. The rejection comes amidst state governments' concerns over revenue loss, leaving airlines grappling with inconsistent and higher taxation across states. Finance Minister Nirmala Sitharaman, addressing the GST Council meeting, clarified, “States do not want ATF to be brought under GST, just like petrol and diesel.” This decision reinforces the current framework where state governments retain the authority to tax ATF at variable rates, creating challenges for airlines aiming for nationwide operational consistency. Business Impact 1️⃣ Uneven Tax Burden: Airlines will continue to face varying tax rates on ATF, leading to fluctuating operational costs. For an industry already operating on razor-thin margins, this adds another layer of unpredictability. 2️⃣ Reduced Competitiveness: Global competitors benefit from streamlined taxation structures. Indian airlines may find it harder to compete due to a fragmented tax regime. 3️⃣ Impact on Pricing: Higher operational costs may translate into increased ticket prices, potentially slowing passenger growth, especially in price-sensitive domestic markets. 4️⃣ Missed Opportunity for Collaboration: A unified GST on ATF could have simplified compliance and promoted collaboration between states and airlines to boost the aviation sector. Business Lesson This decision underscores the importance of aligning taxation policies with industry growth objectives. States prioritizing immediate revenue concerns over long-term economic benefits risks limiting growth opportunities for industries like aviation that have high economic multipliers. Proactive collaboration between industries and policymakers is vital to address mutual concerns. Creating win-win frameworks can drive sector growth without significantly compromising revenue. What’s Next? The aviation sector must: ✈️ Advocate for dialogue between states and the central government to highlight the long-term benefits of uniform taxation. ✈️ Innovate operational strategies to mitigate taxation discrepancies, such as optimizing fuel procurement. ✈️ Explore incentives or rebates that states might offer to attract aviation-related investments. 💬 Do you think states should rethink their stance on ATF under GST? Share your insights below! 🔄 If you found this post insightful, like, repost, and drop a comment. 📢 To level up your feed with more industry-driven perspectives, don’t forget to follow me! #Aviation #GSTIndia #AviationFuel #TaxationMatters #IndustryInsights #EconomicGrowth

After noting significant violations by airlines regarding unpaid goods and services tax (GST) collected on no-show or last-minute cancelled tickets, the government has reportedly mandated that airlines share daily passenger records with tax authorities. The GST authorities now require every aircraft operator to provide passenger or final flyer data daily, along with total bookings. This measure will enable tax authorities to reconcile the data with the GST paid by these operators.These amended rules from the Central Board of Indirect Taxes and Customs (CBIC) are effective immediately. According to the new rules, all aircraft operators must transfer passenger data 24 hours before departure and again at wheels-off time, allowing authorities to verify data at two points.Earlier, airlines were only required to share data either within 24 hours of departure or at wheels-off time, or at the scheduled take-off time, granting them the flexibility to select which data to report. The new rules eliminate this choice.At present, passengers are charged a 5% GST on economy class tickets and 12% on business class tickets. Businesses can also claim an input tax credit (ITC) on airline tickets purchased for business purposes.Sources indicate that the Directorate General of GST Intelligence (DGGI) is investigating cases where airlines collected GST on last-minute cancellations but did not deposit it with authorities. Businesses have also claimed ITC on these cancelled tickets, contributing to substantial revenue leakage.“This measure will help the government plug the gaps and ensure smooth compliance between government and industry,” an official stated.

Sweden to abolish aviation tax 💲 The Swedish Parliament has decided that the #aviation #tax in Sweden will be abolished as of 1 July 2025. This means that airlines will no longer need to report and pay aviation tax for passengers travelling from Swedish airports. Learn more about the new rules here: https://lnkd.in/dwYDad8A

From 1 January 2025, airlines must pay passenger taxes on commercial flights from Denmark. Under the new rules, airlines are responsible for ensuring correct registration, reporting, and accounting. Failure to comply with the requirements can result in fines of 10,000 Danish kroner per offence 💰 Learn more about the new rules here.

One Minute Week: The taxman cometh (for business aviation) Business Aviation is attracting the interest of tax authorities on both sides of the Atlantic. In February, the US Internal Revenue Service (IRS) announced plans to start audits on dozens (its figure) of business aircraft that are also used for personal flights. It said that these audits will be focused on aircraft used by large corporations, large partnerships and high-income taxpayers. Deductions are allowed for aircraft expenses, provided that the aircraft is used for business purposes. However, if the aircraft is also used for non-work flights it can affect the company’s right to deduct some costs. There does seem to have been an increase in audits since then, but because audits typically take at least 12 months, it is too early to say if the IRS has found any mistakes. Tax specialists say that there has also been an increase in state tax audits for aircraft. Canada introduced a luxury tax on aircraft, boats and high-end cars in September 2022. This only really came into effect in October 2023 for new aircraft because of order backlogs. Last month, Michel Barnier, the French prime minister, proposed a tax of up to €3,000 per flight. If this comes into effect (it may not), it could increase the cost of business aviation flights by between 20% and as much as 50%. The European Business Aviation Association (EBAA) and EBAA France have pushed back hard against this.  Last week, the UK government announced that it is increasing air passenger duty on all flights. This is a per-passenger tax that airlines and operators calculate and pay. The BBGA British Business and General Aviation Association (BBGA) has requested an urgent meeting with the aviation minister to “seek acknowledgement that business and general aviation is a recognised growth enabler for UK GDP”. The UK rise, which will definitely come into effect for jets, works out at about $130 per passenger for shorter flights to mainland Europe and $1,500 for a long-haul flight. “Candidly, while the budget means very marginal price increases for our clients, the other tax increases such as National Insurance, capital gains tax and private school fees are likely to be of far greater concern to UHNWIs,” says Toby Edwards, co-CEO of charter broker Victor. This is a valid point. Taxes targeting flights are typically part of larger measures aimed at rich individuals and corporates. France is trying to find €60bn in savings and tax rises for its next tax year. The UK budget saw a £40bn increase in taxes. The biggest risk to business aviation is an economic downturn. While no one welcomes paying more tax, the industry can also use taxes to demonstrate to critics that it pays its way. Full story via the link. tinyurl.com/yrcdmwux #OneMinuteWeek #aviationtax #aviationfinance #businessaviation #businessjets #businessaviation

✈️ **Airlines Under GST Scrutiny: Government Tightens Rules on Unpaid Tax for Cancelled Tickets** 📄 In a significant move aimed at enhancing compliance and curbing tax evasion, the Government of India is intensifying its scrutiny of airlines regarding the Goods and Services Tax (GST) on cancelled tickets. This comes as a response to concerns over the collection and remittance of GST on cancellations, an area that has seen lapses in adherence, affecting overall tax revenue. Here's what you need to know: 1. **New Regulations on Cancellations**: Airlines will now have stricter guidelines to follow regarding the GST applicable on tickets that are cancelled. This includes a clear mandate to ensure that the tax is collected at the time of ticket booking, irrespective of the later cancellation. 🧾 2. **Impact on Revenue**: The government aims to bridge the revenue gap caused by companies failing to remit taxes after cancellations. By enforcing these regulations, the authorities hope to enhance the overall collection efficiency of the GST framework, vital for economic health. 3. **Consequences for Non-Compliance**: Airlines that do not comply with these new regulations face severe penalties. This can include hefty fines and interest on outstanding tax amounts. Compliance is now more critical than ever for airlines that wish to avoid legal troubles and maintain their market position. 4. **The Bigger Picture**: This scrutiny isn't just limited to airlines; it's a part of a broader strategy to ensure that all sectors adhere to GST guidelines. Enforcement agencies are ramping up audits and inspections to identify non-compliance across industries. 5. **Steps Forward**: It's essential for airline operators to reassess their tax practices, ensuring robust systems for tracking and remitting GST on cancellations. Collaboration with tax consultants and regular audits can help mitigate risks associated with this tightening regulation. As stakeholders in the airline industry, we must recognize these changes not merely as regulatory burdens, but as an opportunity to promote transparency and operational efficiency. Let’s be proactive and ensure our practices align with these new expectations! Stay informed, stay compliant! 🌍✈️ #GST #Airlines #TaxCompliance #GovernmentRegulations #CancelledTickets #Finance #AviationIndustry #BusinessUpdate #Transparency #Taxation Note: AI-powered post. May contain errors.

Global #airlines fear the complexities of #India's #tax #system could drive them away from the world's 3rd largest #aviation #market, warned International Air Transport Association (IATA).  . During a roundtable discussion on the sidelines of its 80th annual general meeting (AGM), #IATA #director #general Willie Walsh highlighted concerns over potential withdrawal of international airlines due to #tax #intricacies, including #double #taxation risks. . “We are very concerned that some of the proposals 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," Walsh said. . “I go back to my time as #airline #CEO. There has always been a #debate about application of #tax #rules in #India, which appear to be far more #complex than anywhere in the #world. These investigations will continue," #Walsh, a former #chief #executive of #BritishAirways, said. . 👉 Full article here 👉 https://lnkd.in/dfh5NUB2

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.

SHIVAM MEHTA, Executive Partner, shared his views with The Economic Times on the outcomes from the 54th GST Council meeting. He highlighted that the exemption granted to foreign airlines for the import of services, without consideration from a related party or establishment, is a welcome step that will help resolve ongoing disputes within the airline sector. He further stated that this exemption appears to be specifically tailored for the airline industry, reflecting the special status the industry holds internationally. Since reimbursing expenses to branches or related parties outside India is a common practice not limited to airlines, further clarity on the taxability is still awaited. Read this story online - https://lnkd.in/gnwwWSiP #Taxation #GSTCouncilmeeting #GST #airlines #relatedparties