Taxation Troubles: Foreign Airlines Face Hurdles in India
June 10, 2024, 3:34 am
British Airways
Location: United Kingdom, England, London Borough of Hillingdon
Employees: 10001+
Founded date: 1974
The Indian aviation sector is facing turbulence as foreign airlines grapple with taxation issues that threaten to disrupt their operations in the country. The International Air Transport Association (IATA) has raised concerns about the impact of tax-related challenges on airlines, warning that these issues could lead to a withdrawal of foreign carriers from the Indian market.
The president of IATA, Wille Walsh, highlighted the gravity of the situation, stating that airlines may gradually reduce their operations in India due to tax evasion alerts from the Directorate General of GST Intelligence (DGGI). Several multinational airlines, including British Airways, Lufthansa, Emirates, Etihad Airways, Qatar Airways, Singapore Airlines, Thai Airways, and Airlines of Saudi Arabia, have received notices for non-payment of taxes on services provided to their Indian entities.
One of the key issues raised by IATA is the attribution of tax liabilities to branch offices of foreign airlines in India. The association argues that crucial operational decisions, such as contracting for aircraft leases, crew, pilots, fuel, and maintenance, are made by the airlines' head offices, not their branch offices in India. This discrepancy in tax assessment has created a legal grey area that is causing uncertainty and financial strain for foreign carriers operating in the country.
The aviation industry plays a vital role in driving economic growth and connectivity, making it imperative for the Indian government to address these taxation hurdles promptly. Walsh emphasised the need for the government to implement the right policies to unlock the country's aviation potential, citing the example of the Chinese market as a benchmark for growth and development in the sector.
In a separate development, KEC International, a global infrastructure EPC company, has secured contracts worth Rs 1002 crore, further solidifying its position as a key player in the infrastructure domain. The company's projects in power transmission and distribution, railways, civil, and cables sectors underscore its commitment to delivering reliable and efficient solutions for India's infrastructure needs.
Meanwhile, Tamil Nadu's Transport Department has initiated a trial to convert diesel buses to Compressed Natural Gas (CNG) in a bid to reduce emissions and enhance the environmental sustainability of the state's public transit system. This move aligns with global efforts to mitigate the harmful effects of diesel exhaust on air quality and public health, signalling a shift towards cleaner and greener transportation solutions.
In Kolkata, the completion of Metro Pier 319 marks a significant milestone in the city's transportation infrastructure development. The Rail Vikas Nigam Limited (RVNL) has announced the imminent handover of the Chingrighata site, highlighting the progress in expanding the city's metro network to ease congestion and improve connectivity for residents.
On the economic front, the Indian Energy Exchange (IEX) has witnessed a record surge in trading volume, reaching 10,633 million units in May 2024. This unprecedented growth reflects the evolving dynamics of India's power sector, driven by increased adoption of renewable energy sources and efficient energy management solutions. The platform's reliability, transparency, and efficiency in matching supply with demand have positioned it as a key player in facilitating energy trading and supporting India's clean energy transition objectives.
In the realm of transportation infrastructure, the Indian Railways has recorded the highest-ever freight loading in May 2024, surpassing previous records despite challenges such as fluctuating energy prices and policy uncertainties. Additionally, the Competition Commission of India has approved Cintra's acquisition of IRB Infrastructure Trust and MMK Toll Road Private Limited, signalling further consolidation in the transportation infrastructure sector.
As foreign airlines navigate taxation hurdles, infrastructure companies secure new contracts, and transportation initiatives drive sustainability and efficiency, the Indian economy continues to evolve and adapt to meet the challenges and opportunities of a rapidly changing global landscape. The government's policy decisions and industry collaborations will play a crucial role in shaping the future of India's aviation, infrastructure, and transportation sectors.
The president of IATA, Wille Walsh, highlighted the gravity of the situation, stating that airlines may gradually reduce their operations in India due to tax evasion alerts from the Directorate General of GST Intelligence (DGGI). Several multinational airlines, including British Airways, Lufthansa, Emirates, Etihad Airways, Qatar Airways, Singapore Airlines, Thai Airways, and Airlines of Saudi Arabia, have received notices for non-payment of taxes on services provided to their Indian entities.
One of the key issues raised by IATA is the attribution of tax liabilities to branch offices of foreign airlines in India. The association argues that crucial operational decisions, such as contracting for aircraft leases, crew, pilots, fuel, and maintenance, are made by the airlines' head offices, not their branch offices in India. This discrepancy in tax assessment has created a legal grey area that is causing uncertainty and financial strain for foreign carriers operating in the country.
The aviation industry plays a vital role in driving economic growth and connectivity, making it imperative for the Indian government to address these taxation hurdles promptly. Walsh emphasised the need for the government to implement the right policies to unlock the country's aviation potential, citing the example of the Chinese market as a benchmark for growth and development in the sector.
In a separate development, KEC International, a global infrastructure EPC company, has secured contracts worth Rs 1002 crore, further solidifying its position as a key player in the infrastructure domain. The company's projects in power transmission and distribution, railways, civil, and cables sectors underscore its commitment to delivering reliable and efficient solutions for India's infrastructure needs.
Meanwhile, Tamil Nadu's Transport Department has initiated a trial to convert diesel buses to Compressed Natural Gas (CNG) in a bid to reduce emissions and enhance the environmental sustainability of the state's public transit system. This move aligns with global efforts to mitigate the harmful effects of diesel exhaust on air quality and public health, signalling a shift towards cleaner and greener transportation solutions.
In Kolkata, the completion of Metro Pier 319 marks a significant milestone in the city's transportation infrastructure development. The Rail Vikas Nigam Limited (RVNL) has announced the imminent handover of the Chingrighata site, highlighting the progress in expanding the city's metro network to ease congestion and improve connectivity for residents.
On the economic front, the Indian Energy Exchange (IEX) has witnessed a record surge in trading volume, reaching 10,633 million units in May 2024. This unprecedented growth reflects the evolving dynamics of India's power sector, driven by increased adoption of renewable energy sources and efficient energy management solutions. The platform's reliability, transparency, and efficiency in matching supply with demand have positioned it as a key player in facilitating energy trading and supporting India's clean energy transition objectives.
In the realm of transportation infrastructure, the Indian Railways has recorded the highest-ever freight loading in May 2024, surpassing previous records despite challenges such as fluctuating energy prices and policy uncertainties. Additionally, the Competition Commission of India has approved Cintra's acquisition of IRB Infrastructure Trust and MMK Toll Road Private Limited, signalling further consolidation in the transportation infrastructure sector.
As foreign airlines navigate taxation hurdles, infrastructure companies secure new contracts, and transportation initiatives drive sustainability and efficiency, the Indian economy continues to evolve and adapt to meet the challenges and opportunities of a rapidly changing global landscape. The government's policy decisions and industry collaborations will play a crucial role in shaping the future of India's aviation, infrastructure, and transportation sectors.