Revamped GST to aid India’s aviation sector

DELHI: In a major relief to the aviation industry, the government announced a slew of changes over the taxation structure after repeated complaints from industry that high taxation may result in a loss of around Rs 6,000 crore, reports Business Standard.

Among primary changes the Inter-state movement of goods like rigs, tools, spares and goods on the wheel like cranes, not being in the course of furtherance of supply of such goods, does not constitute a supply.

This clarification gives major compliance relief to the industry as there is frequent inter-state movement of such kind in the course of providing services to customers or for the purposes of getting such goods repaired or refurbished or for any self-use.

Airlines had told the Finance ministry that another area of concern was GST applicable on transfer of aircraft spares, which are kept in central stores, between States on a daily basis.

“This move will threaten the survival of airlines and will impact us by Rs 3,000 crore a year as no input tax credit is available. We demanded GST exemption on stock transfer for captive consumption,” the executive said. The high rate of IGST on the import of purchased aircraft parts was another issue flagged by the airlines that might lead to an impact of Rs 350 crore every year, the Federation of Indian Airlines (FIA) told the ministry.

Further, in a change of rule, the government announced that Integrated Goods and Service Tax (IGST) on imports of spare engines under a lease agreement will not be charged IGST. Multiple airlines had their aircraft grounded because the customs and excise department had sought a 5 percent levy on the total cost of the aircraft and another 5% GST on lease rentals.

The airlines see this as unfair. The government, too, has since clarified that aircraft, aircraft engines and parts procured on the lease would not face double taxation in the new regime. However, these planes, one each of the three carriers, were imported before the government issued the clarification on July 8.


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