Exclusive: Foreign airlines may pay tax in accordance with GST notices, claim rebate
The issue pertains to cross charges or transactions between separately registered units of a single entity.
About a dozen foreign airlines including British Airways, Etihad, and Emirates that have received Goods and Services Tax (GST) demand notices pertaining to cross charges are likely to pay up the amount and not contest its validity, people aware of the matter said.
Most of these airlines are based outside India and plan to claim rebates in their home countries on the additional goods and services tax paid.
Cross charges refer to transactions between separately registered units of a single entity. Under GST, an Indian entity and its head office are treated as separate units. This means transactions between them come under the purview of the tax regime, even if they are without consideration.
Many foreign airlines have been under investigation on this count. According to the GST department, there has been deemed supply of services and it was found that their India-specific services were not billed here, which led to the tax notices being issued.
Finnair, KLM Royal Dutch Airlines, Qatar Airways, Virgin Atlantic and British Airways confirmed they have received the notices from the Directorate General of GST Intelligence (DGGI). The GST authorities also sent notices to Etihad, Emirates, Saudi Airlines, Air Arabia, Oman Air, and Kuwait Airways.
