GST on Airlines:- The Central Board of Indirect Taxes announced a change in the record-keeping rules for aircraft operators, with immediate effect. The new regulations require all aircraft operators to transfer passenger data at two specific times: at the moment the aircraft wheels off and 24 hours prior to departure.
This change replaces the previous option that allowed operators to submit passenger data either within 24 hours of departure or at wheels-off time. The amendment aims to enhance compliance and address concerns regarding underpayment for products and services.
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The decision to implement these stricter rules comes in response to identified issues, particularly involving the collection and remittance of Goods and Services Tax (GST) by airlines.
Business class tickets currently incur a 12% GST, while economy class tickets are taxed at a reduced rate of 5%. Businesses can claim input tax credit (ITC) on their airline tickets if they present a GST-compliant invoice, provided the trip is business-related.
Officials noted that the Directorate General of GST Intelligence (DGGI) found several airlines collecting GST on last-minute cancellations without properly depositing these amounts with the government. This practice raised concerns about compliance and transparency in the industry. Additionally, many airlines were reportedly claiming ITC on tickets that had been cancelled, further complicating the tax landscape and impacting revenue collection for the government.
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By mandating the dual submission of passenger data, the Central Board of Indirect Taxes aims to tighten oversight and ensure that airlines fulfill their tax obligations more reliably. The regulatory change is expected to provide greater clarity and accountability within the aviation sector, potentially minimizing discrepancies in tax collection related to airline tickets.
These adjustments reflect a broader effort by tax authorities to enhance compliance in various sectors, and the aviation industry is no exception. As airlines adapt to these new requirements, it remains to be seen how effectively they will implement these changes and what impact they will have on operational processes and financial reporting.
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