Representative image
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The airlines include British Airways, Lufthansa, Oman Air, Emirates and Singapore Airlines . File.
| Photo Credit: Reuters

The global trade body for airlines has expressed its “disappointment” over show-cause notices to 10 international airlines over GST dues of ₹10,000 crore, which it has called “flawed”. It has warned that the move could “dampen and risk India’s strong aviation potential”.

The Directorate General of Goods and Services Tax Intelligence (DGGI) has sent show-cause notices to 10 foreign airlines offering flights to the country for alleged non-payment of tax amount to ₹10,000 crore for providing services such as aircraft maintenance, as well as payments for crew and rentals from their headquarters to their unit in India. The airlines include British Airways, Lufthansa, Oman Air, Emirates and Singapore Airlines

“The 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,” said Dr Xie Xingquan, International Air Transport Association’s Regional Vice President for North Asia and Asia Pacific, in a press statement, adding that the tax authority does not take into consideration the nature and conventions involved in the provision of international air transport.

The senior representative said that IATA was disappointed that India’s DGGI has procceded to issue showcause notices despite a number of representations made by the industry on this matter.

IATA has also urged the Government to urgently help resolve this matter, which “can dampen and risk India’s strong aviation potential”, it has warned.

It says India was alone in its approach. “Nowhere else around the world is this practiced. Indian carriers operating to destinations outside India do not face similar situations or demands,” said Mr Xie.

IATA Director General Willie Walsh said that the aviation sector has recovered from the Covid-19 pandemic. File
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The global airline industry is expected to record a profit of $1 trillion for the year 2024 as it marks its recovery from the Covid-19 pandemic, according to the International Association of Air Transport Association (IATA). “Aviation has recovered from the pandemic and is growing profitably,” Willie Walsh, Director General of IATA, said at its 80th Annual General Meeting being held in Dubai.

Though the industry will witness record revenues of almost $1 trillion in 2024, expenses will also be at a record high of $936 billion. The net profit will be $30.5 billion, which represents a net margin of just over 3%, Walsh said in his opening remarks. He underlined that airlines only retain $6.14 of profit per passenger.

However, a fiercely competitive environment among airlines and the oligopolistic upstream supply chain’s lack of competition will continue to squeeze the airline industry which is expected to earn a 5.7% return on invested capital which is well below the average 9% cost of capital.

[The reporter is in Dubai at the invitation of IATA]