The Central Board of Indirect Taxes and Customs (CBIC) has notified that foreign airline companies in India would be exempt from paying GST on services imported from their offshore branches. The circular follows a recommendation made by GST Council on September 9.
Experts say this would grant relief to the foreign airline industry for future transactions, but whether or not this notification is applicable for the past period is unclear at the moment. The Council, however, in its September meeting had recommended to regularise taxation of past transactions on ‘as is where is’ basis.
Further, the exemption comes with certain conditions. For instance, the foreign airline must secure certification from the Ministry of Civil Aviation (MoCA), declaring the airline as a designated carrier under existing bilateral agreements. Additionally, Indian carriers must receive similar tax benefits in the airline’s home country. Currently, the process for obtaining MoCA certification is not clearly defined, leaving airlines in limbo while they wait for further announcements, say experts.
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