The Central Government has notified exemption to the import of aircraft, aircraft engines and its parts procured on lease from the Goods and Services Tax (GST) net.
The finance ministry in a notification on Sunday, said that airlines would not have to pay GST on import of aircraft and its parts if GST was paid on their lease.
Under the recently introduced GST regime, aircraft imported on lease basis attracted integrated GST (iGST) of 5 per cent. However, several representations were received by the Government from the Civil Aviation Ministry against the levy.
Taking aircrafts on lease is a common practice in the airline business in India. Leasing not only helps increase fleet size quickly, but also reduces the cost of airline operations. Low-cost carriers such as SpiceJet and IndiGo have been resorting to leasing of aircraft in a big way to expand their operations.
Reportedly, Airlines are awaiting a formal clarification on several other areas of concerns such as input tax credit not being available for economy class tickets and the movement of spares from one part of the country to another.
Read the full text of the Notification below.
