GST Impact: Airlines Seek Tax Exemption On Aircraft Parts Imported After Servicing


GST

Domestic airlines have sought from the government tax exemption under the GST regime on importing and servicing aircraft parts.

The Federation of Indian Airlines (FIA), an association of private airlines in India, has written to ministries of finance and civil aviation, citing the high tax rate on servicing parts and also on import of these parts has put a huge financial burden on the companies.

Sources in a private Indian carrier said that the burden of increased taxes under the GST could be as high as Rs 4,750 crore every year, on the industry.

Sources in a private Indian carrier said that the burden of increased taxes under the GST could be as high as Rs 4,750 crore every year, on the industry.

Touted by the government as the biggest tax reform since Independence, the Goods and Services Tax kicked in on July 1.

The FIA in its submissions before the government said that till June 30, no taxes were levied on re-import of aircraft parts and engines after servicing them abroad. Further, import of aircraft parts will also be subjected to the GST up to 28%, said the airlines lobby requesting that such imports be exempted from taxes.

“In light of the above difficulties faced, it is humbly prayed that an exemption be granted on the IGST paid on the parts of aircraft imported after repair/servicing,” said the FIA letter.

Sources in private airlines say that a request has been made to the government to release the re-imported repaired engines against bonds by companies.

A source in a private airline said that on an average 250 engines are sent abroad by private carriers for repair and servicing.

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