No GST on foreign airlines for service imports from offshore branches : CBIC
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.
“Concerns have emerged regarding the applicability of the exemption, as the language of the notification suggests that the relief may only apply to future transactions, which is not supporting the earlier statements about retrospective application,” said Sanjay Chhabria, Indirect tax-lead at Nexdigm. As per industry sources, foreign airline companies are facing a tax liability to the tune of Rs 40,000 crores, which are likely to be annulled.
