Govt exempts import of aircraft and its parts, taken on lease, from GST

The Dollar Business Bureau

The Government has exempted import of aircrafts, its engines and parts, taken on lease, from the Goods and Services Tax (GST), a move that is seen as a relief to the domestic aviation industry.

Under the new GST regime, implemented on July, the aircrafts imported on the basis of lease has attracted an integrated GST (iGST) of 5%. 

The airline industry had been urging the Government for a relief as it has to face a double levy of 5% at the time of importing and another tax of 5% at the time of paying for the lease rent. 

The Ministry of Civil Aviation has raised the industry’s concerns before the Department of Revenue on various occasions. 

In a notification released on Saturday, the Finance Ministry said that on the import of aircrafts and its parts, the airlines would not require to pay the GST if it was already paid for their lease. 

This comes as a major relief to the airlines industry as it is common to take the aircrafts on lease in the airline business in the country. Taking aircrafts on lease not only helps in increasing their fleet size rapidly, but also helps in reducing the operational cost of airlines. Domestic budget carriers such as IndiGo and SpiceJet have been using leasing of aircraft in a huge way to expand their business operations.

However, airline industry is awaiting for a formal clarification on various other concern areas such as input tax credit not available on tickets for economy class and spares movement from one part to another of the country.