IATA seeks "abated" rate of GST on flights

The Economic Times By PTI Oct 21, 2016, 03.58 PM IST

NEW DELHI: Global airlines' body IATA has sought an "abated" rate of GST on flight tickets, saying the tax burden on the aviation sector was already high and the GST regime should conform to global standards and principles.

Maintaining that the International Air Transport Association (IATA) has been "working closely" with the Goods and Services Tax (GST) Secretariat here to address some issues of concern to airlines, its chief Alexandre de Juniac said "the GST regime needs to adhere to international standards and principles."

"We have called for a zero-rating for international flights when the GST comes into effect next April. This seems unlikely. To limit its damage to the sector's competitiveness, we would at least hope for an abatement in the rate," de Juniac told reporters here.

He said the airlines in India faced "an onerous tax burden, including the imposition of service tax to services rendered abroad, including those for overflight charges, global distribution systems and international tickets."

This, he said, was "in contravention of international principles established by governments" through the UN body International Civil Aviation Organisation (ICAO).

The IATA Director General and CEO, who met top officials of the government and Indian carriers during his two-day visit here, said he had shared these and other concerns with the government.

Besides GST, the concerns included "high" tax on aviation fuel charged by states, the service tax on air tickets and exorbitant airport charges.

On privatisation of major Indian airports, he acknowledged that the awarding of airport concessions has contributed to the development of India's airport infrastructure.

However, "while the passenger experience has improved, the impact for airlines has been far less positive," he said.

Asserting that IATA "does not support privatisation of airports, nor are we officially opposed to it", de Juniac said looking at the experience in this regard in India and other countries, "I am hard pressed to find an example where the results, overall, have been positive."

"A private sector mindset can add value to airport projects with efficiency, cost effectiveness, entrepreneurial spirit, and so on. But we need a stronger regulatory framework than exists today to ensure that there is a balance struck between commercial and national interests," he said.

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