Impact Of GST on Aviation Industry

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EFFECT OF GST ON INDIAN AVIATION INDUSTRY
The implementation of Goods and Service
Tax (GST) Act and its affect on Indian Aviation
industry.
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Drawbacks of GST on Aviation Industry

• Aircraft lease/ purchase now taxable
• Increase in maintenance costs
• Compliance Cost
• Import of Aircraft and Its Spare Parts

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Aircraft lease/ purchase now taxable

Currently, bearers do not pay any indirect taxes
on the lease of aircraft in India. Under the
financial lease arrangement, service tax is
applicable only 10 of the lease apartments.
After the GST Model law, GST paid on leasing of
goods (i.e. aircraft) that would pass as a
service and in the hands of the carrier.
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Increase in maintenance costs

• Currently, maintenance and repair costs of
  aircraft products are tax-free outside the India
  but under the GST Model Law maintenance and
  repair cost out of India are taxable. So After
  GST Implementation maintenance cost is liable to
  increase.

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Compliance Cost

Under GST registration process, the tax is needed
to be collected from each and every state from a
separate portal while in the previous case, there
was only a single platform to collect the taxes
which means that the compliance cost will go up.
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Import of Aircraft and Its Spare Parts

Under GST if the exemption is not provided, then
import price will increase.While currently,
import of aircraft and its spare parts is
exempted from customs duty.
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Conclusion

Overall, the aviation sector will see a steep
hike in the costing and pricing strategy as the
GST will include this industry at an aggregate
level.
Source https//goo.gl/bfER1y
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