GST Council's decision on tax related to foreign airlines a 'positive development': IATA

Global airlines' grouping IATA's chief Willie Walsh on Wednesday said the decision related to tax on import of services by an establishment of a foreign airline in India is a positive development.

Last month, the International Air Transport Association (IATA) raised concerns about 10 foreign carriers facing GST demands worth over Rs 10,000 crore and had also said the matter can dampen and risk the country's strong aviation potential.

Earlier this week, GST Council decided to exempt the import of services by an establishment of a foreign airline company from tax and regularise the past period on an 'as is where is basis'.

When asked about the decision, Walsh said the issue now seems to be resolved and it is a positive development.

The tax issue was becoming an issue of concern, he said while speaking on the sidelines of a conference in the national capital.

Show cause notices for GST demands worth over Rs 10,000 crore have been issued to ten foreign carriers operating to India, sources had said on August 6.

IATA, on August 6, said it was disappointed that the Directorate General of GST Intelligence (DGGI) has proceeded to issue show cause notices to some foreign airlines operating to India despite a number of representations made by the industry on this matter.

"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), had said in a statement.

He had also said India is alone in its approach and that nowhere else around the world is this practised.