New Delhi: The Directorate General of GST Intelligence (DGGI) summoned ten foreign airlines operating in India over alleged tax evasion on the import of companies, in accordance with Reuters quoting a report by CNBC-TV18. The company sought clarification over fee of crew salaries and workers bills on the workplaces of worldwide airlines, in accordance with sources.
DGGI, the investigative arm underneath the GST regime, alleged that these foreign airlines headquartered overseas have department workplaces in India which might be permitted by RBI to remit foreign exchange associated to passenger gross sales and cargo gross sales. However, different air companies are supplied by the top workplace overseas which embrace rental, upkeep of plane, crew wage, mentioned the CNBC report.
Which airlines have been summoned?
These companies coming from overseas have been liable to GST underneath the reverse cost mechanism, which these airlines are alleged to not have paid. These airlines embrace – British Airways, Lufthansa (German Airlines), Singapore Airlines, Etihad Airways, Thai Airways, Qatar Airways, Saudi Arabia Airlines, Emirates, Oman Airlines and Air Arabia, in accordance with sources. These investigations have been carried out by DGGI Meerut and Mumbai zones, they added.
“Tax evasion is on account of import of services from head office by Indian branch offices,” mentioned sources final yr, as per a earlier report, indicating that the Indian workplaces of those foreign airlines weren’t complying with GST guidelines. The Indian workplaces of British Airways, Lufthansa (German Airlines), Singapore Airlines, Etihad Airways, Thai Airways, Qatar Airways, Saudi Arabia Airlines, Emirates, Oman Airlines, and Air Arabia are but to return again to DGGI with clarifications and have sought extra time to reply to the summons.
What did specialists say?
“Every penny paid by the Indian branch office would not be subject to tax merely because there is a remittance from India. The taxability depends on the nature of the transaction and the place of provision for such services,” mentioned Abhishek A Rastogi, founding father of Rastogi Chambers, who’s arguing on the import of such companies for various sectors earlier than writ courts.
“For instance, the remittances made by the Indian branch office to the overseas head office with respect to crew salaries may not be taxable and will depend on the nature of the employment contract. Similarly, the remittances which were made for hotel accommodation, used by the Indian staff outside of India, may again not qualify as import of services as the place of provision of the actual rental accommodation is outside of India,” he added. Rastogi mentioned there are numerous prices which could possibly be for over one jurisdiction and the allocation of such bills can be difficult. It would even be troublesome to find out the worth of the import of companies on an precise foundation.
“The Directorate General of GST Intelligence (DGGI) is honing in on specific sectors that are implicated in widespread issues potentially leading to tax evasion risks for a broad spectrum of taxpayers. This focused scrutiny by DGGI, might not be well-received in the aviation sector and could be viewed as unfavourable targeting,” mentioned Rajat Mohan, government director at MOORE Singhi.
(with inputs from Reuters)
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