Airlines Face Tightened GST Norms Amid Scrutiny Over Unpaid Tax on Cancelled Tickets

The government has escalated GST compliance requirements for airlines, particularly for unpaid GST on last-minute cancellations. Airlines must now share daily passenger data, allowing tax authorities to reconcile bookings with GST payments.

The Central Board of Indirect Taxes and Customs (CBIC) has mandated real-time passenger record sharing, effective immediately. Airlines must submit passenger data 24 hours before departure and again at wheels-off time. Previously, they could choose when to report data within a specified timeframe, but this flexibility has been removed.

Economy and business class tickets incur GST rates of 5% and 12%, respectively. Businesses claiming input tax credit (ITC) on airline purchases must comply with these new norms. Reports indicate the Directorate General of GST Intelligence (DGGI) is investigating cases where airlines collected GST on cancellations but failed to remit it. Misuse of ITC claims on these cancellations has also been highlighted.

Experts believe this will increase compliance efforts for airlines, yet authorities view it as crucial to close revenue gaps. The CBIC clarified that cancellation fees are part of the transportation supply, and GST should be charged accordingly.

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