IATA opposes GST levy on foreign airlines in India

The International Air Transport Association (IATA) has voiced its opposition to the imposition of Goods and Services Tax (GST) on services rendered by foreign airlines’ headquarters to their local offices in India. According to IATA, foreign airlines should not be held liable for GST on such services.

The Directorate General of GST Intelligence has initiated investigations and issued summons to foreign airlines, alleging tax evasion concerning the import of services by airlines operating in India.

IATA, representing 330 carriers worldwide, firmly opposes this governmental action, asserting that costs incurred by airline headquarters should not be subject to GST. These costs encompass various operational aspects, including aircraft rental expenses, crew, and pilot costs associated with passengers departing from India.

IATA argues that airline branch offices in India do not partake in critical operational functions such as leasing aircraft, hiring crew and pilots, procuring fuel, and maintenance. Instead, all decisions and operations concerning flights to and from India are made, managed, and executed by airline headquarters. Therefore, attributing strategic and operational risks and functions to branch offices in India is legally inaccurate, as stated by IATA.