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Airlines spared dual levy of GST on leased aircraft

LiveMint logoLiveMint 08-07-2017 Gireesh Chandra Prasad

New Delhi: The government on Saturday exempted import of aircraft, aircraft engines and other parts from the integrated goods and service tax (IGST) when airlines bring these into the country on lease—provided the IGST on the lease rental is paid.

The decision, notified on Saturday evening, brings relief from double taxation to airlines which use leased aircraft. The notification exempted the 5% IGST at the time of import of these items and clarified that a 5% IGST will be applicable only on the lease rental paid by the importer.

The relief is provided with the condition that the importer should not sell these items without permission from the authorities and that these have to be re-exported within three months of the expiry of the lease.

Abhishek Jain, tax partner, EY, said GST on leased aircraft and parts would only be payable on lease rentals and not at the time of import. “This would bring huge relief to the airline industry by resolving the issue of dual levy of GST, especially for the reason that GST paid at the time of import was not creditable against economy class travel,” said Jain.

The GST Council, chaired by finance minister Arun Jaitley, has an implementation committee comprising central and state officials that will look into issues where urgent decisions are to be made.

Another sector that is seeking tax relief is the textile sector, which traditionally enjoyed exemption on some of their products.

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