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Foreign airlines operating in India will not be liable to goods and services tax (GST) on services provided by the head office to a branch office, according to a government notification. Academic institutions that have received grants for research will also be exempt from GST, as per another notification.
The Central Board of Indirect Taxes & Customs (CBIC) issued several notifications to implement decisions taken at the 54th GST Council meeting. The new rules will be effective from October 10.
Foreign airlines, however, will require a certificate from the civil aviation ministry saying that the establishment of the foreign company in India is under the applicable bilateral air services agreement. The GST Council had recommended that past demands be regularised on “as is where is” basis.
In a communication addressed to all the airlines and various ministries, the association informed that travel agents have been overcharged GST (K3), the cancellation change fees as 18 per cent in place of 5 per cent (in the case of the economy) and 12 per cent (business) class. Thus, a huge amount was wrongly collected in the name of K3.
The CBDT also notified the relief for registered persons who have been issued notices under section 128A of the GST Act. They will get a waiver from penalty and interest if they pay the tax and comply by March 31, 2025. Taxpayers facing demand orders under section 74(1), who have not filed an appeal, can also avail this relief. The notification aims to reduce the burden of penalties for those willing to comply, encouraging voluntary compliance and resolving disputes outside litigation and reducing burden on both taxpayers and the government, said experts.
The latest notifications also allow taxpayers to amend their past input tax credit discrepancies through a special rectification window.
The move aims to give taxpayers a second chance to correct genuine mistakes, resolving many pending litigations.
