Finance Ministry may provide relief for aviation sector ahead of GST rollout

The Ministry of Finance (MoF) is unlikely to heed to a request from the Ministry of Civil Aviation (MoCA) to defer the roll out of Goods and Service Tax (GST) from July 1 but may provide some more time to restructure levies.
 
The MoCA has told the MoF that it would be difficult for the airlines to switch over to the GST regime on July 1 as it need more time to revamp their systems to comply with the new tax regime.
 
However, the MoF has already made it clear that it would not postpone the roll-out of the GST regime and the preparations have entered an advanced stage. At the same time, sources said, the MoF may consider providing some relief to the airlines.
 
Minister of State for Civil Aviation Jayant Sinha had on Wednesday chaired a meeting on GST preparedness with stakeholders, including airlines, airports and cargo.
 
In a letter earlier this week, the MoCA has sought two more months saying the airlines are not yet ready with their systems to be in compliance with GST.
 
The national carrier Air India and others are concerned over certain aspects of the GST and have argued that making changes in the global ticket distribution system to ensure compliance with GST would take time, officials said citing the reasons for seeking postponement in GST roll-out.
 
Another concern raised by the airlines are about the lack of clarity on certain aspects that could lead to higher operational cost.
 
They are also concerned over the possibility of movement of equipment or aircraft parts being taxed under the GST.

One of the demands by the MoCA was to treat non-stop and stop-over international flights at par under GST.
 
As per the system, non-stop international tickets would attract more money compared to others because in stop-over flights, the GST is applicable only for one portion of the journey and not the whole.