The International Air Transport Association (IATA) on Tuesday (August 6) voiced its concerns about the show cause notices issued to some foreign airlines operating in India regarding Goods and Services Tax (GST). IATA warns that this development could undermine India’s strong aviation potential.
In a recent statement, IATA expressed disappointment over the Directorate General of GST Intelligence (DGGI) issuing these notices despite industry appeals. The association, which represents over 330 airlines—including Indian carriers—accounting for more than 80% of global air traffic, urged the Indian government to address the issue promptly.
IATA’s Xie Xingquan criticises GST policy on foreign airline expenses
Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia Pacific (ad interim), criticised DGGI’s stance that GST should apply to expenses incurred by foreign airlines’ headquarters, arguing that it fails to account for the unique aspects of international air transport.
“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.
DGGI sends GST notices to 10 foreign airlines
He pointed out that this approach is not practiced elsewhere in the world and that Indian carriers operating internationally do not face similar demands. “Indian carriers operating to destinations outside India do not face similar situations or demand,” he added.
Since October 2023, ten foreign airlines have received notices from DGGI. IATA has submitted a comprehensive representation to the Indian government and continues to work closely with authorities to resolve the matter.
IATA calls for global GST policy consistency
Xie Xingquan stressed on the need for a globally consistent policy framework for international air transport, highlighting that the current situation could jeopardize India’s aviation sector.
“The international nature of air transport necessitates a clear and consistent policy framework globally. IATA continues to work closely with the government of India on this subject. IATA has also urged the government to urgently help resolve this matter, which can dampen and risk India’s strong aviation potential,” Xie Xingquan said.
The statement from IATA comes at a time when there are also concerns about a GST demand received by IT major Infosys. On August 1, Nasscom, the apex IT body, criticized the latest tax demand as indicative of a misunderstanding of the industry’s operational model, reflecting broader issues within the sector that lead to unnecessary litigation and uncertainty.