08/08/24

TAX: Emirates, Qatar Airways and British Airways among 10 foreign airlines to get GST evasion notices

As published on: cnbctv18.com, Wednesday 7 August, 2024. 

India’s central GST intelligence authority — Directorate General of GST intelligence or DGGI — is learnt to have sent show cause notices (SCN) to 10 foreign airlines operating in India.

Sources told CNBC-TV18 on August 6 that the 10 airlines that have been issued these notices are — “Emirates for tax evasion worth ₹7550 crore, Etihad Airways for ₹1660 crore, Saudi Arabia Airlines for ₹612 crore, Air Arabia for ₹455 crore, Oman Airlines for ₹71 crore, Thai Airways for ₹60 crore, Qatar Airways for ₹53 crore, Singapore Airlines for ₹40 crore, British Airways for ₹33 crore and Lufthansa Air Cargo for ₹10 crore.”

DGGI’s notices are part of the detailed action taken against these airlines in 2023, sources said. They added that the tax authority has alleged tax evasion on account of import of services from head office by Indian branch offices.

CNBC-TV18 had first reported about DGGI conducting raids at branch offices of these airlines in India on October 18, 2023, post which these airlines had been facing inquiries and claims.

Experts claim that these foreign airlines are likely to get a relief from the aforementioned tax claims through the section11(A) provisions cleared by the GST council in its last meeting on June 22.

Meanwhile, the International Air Transport Association (IATA) said it is disappointed with the DGGI’s move despite a number of representations made by the industry on this matter.

Dr Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia Pacific, told CNBC-TV18 that 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. Furthermore, India is alone in its approach, nowhere else around the world is this practiced,” he claimed.

IATA Regional VP added that Indian carriers operating to destinations outside India do not face similar situations or demands. The international nature of air transport necessitates a clear and consistent policy framework globally, he said.

IATA continues to work closely with the Indian government on this subject, he said, adding the international airlines’ association body has also urged the government to urgently help resolve this matter, which can dampen and risk India’s strong aviation potential.

To be seen is whether these airlines settle the dues or they get an indemnity from these claims through the section11(A) provisions cleared by the GST council in its last meeting.

Tags

Emirates British Airways GST Tax evasion Airlines