IATA Praises India's Tax Exemption For Foreign Airlines, Resolves GST Issue

Willie Walsh, head of the International Air Transport Association, praised the recent decision to exempt foreign airlines from tax on imported services in India, calling it a positive step.

Last month, IATA expressed worry about 10 foreign airlines facing Goods and Services Tax demands exceeding Rs 10,000 crore, noting that this could harm India's growing aviation sector.

Earlier this week, the GST Council decided to exempt foreign airlines from tax on imported services and to address past issues on a case-by-case basis.

When asked about the decision, Walsh said the issue now seems to be resolved and is a positive development.

He noted that the tax issue had been a growing concern while speaking at a conference in the national capital.

Sources reported on August 6 that show cause notices for GST demands exceeding Rs 10,000 crore had been issued to ten foreign carriers operating in India.

IATA, on Aug. 6, said it was disappointed that the Directorate General of GST Intelligence has proceeded to issue show cause notices to some foreign airlines operating to India despite a number of representations made by the industry on this matter.

'DGGI's assertion that GST should apply to expenses incurred by the headquarters of foreign airlines (with a branch office in India) in the course of providing air transport services is flawed. It does not take into consideration the nature and conventions involved in the provision of international air transport,' Xie Xingquan, IATA's Regional Vice President for North Asia and Asia Pacific (ad interim), said in a statement.

He had also said India is alone in its approach and that nowhere else around the world is this practiced.

(With Inputs From PTI.)