SpiceJet chairman and managing director Ajay Singh said on Friday that the Goods and Services Tax (GST) had become an additional burden on the civil aviation sector that needs to become globally competitive in order to boost tourism.
“There is no shortage of ambition in the civil aviation sector but a lot needs to be done,” Mr. Singh said at the World Economic Forum’s (WEF) India Economic Summit.
‘World’s most expensive’
“We cannot have the most expensive aviation sector in the world, the most expensive turbine fuel and airports in the world because there was a socialist mindset that flying is for the rich so everything needed to be taxed. Now we have added to that by putting GST which is a really large tax on all sorts of activities related to aviation,” he added.
“These issues need to be fixed and we need to be globally competitive. If we can be globally competitive in terms of cost and tax infrastructure, there is no reason why India will not be the fastest growing aviation market in the world in the next decade,” Mr. Singh added.
“The public sector doesn’t seem to understand profit, business and private sector. It’s still looked at by suspicion even today and we see this in the GST discussions. You go and speak to the bureaucrats, it seems that either they don’t understand or that they have other priorities,” he said.
The civil aviation industry had asked the Centre to delay the GST roll-out from its scheduled date of July 1 highlighting several issues.
The Civil Aviation Ministry had also written to the Finance Ministry earlier this year asking for deferment to September 1. However, the Ministry didn’t agree to a date shift.
The airlines have been demanding input tax credit for economy class seats as well. Under GST, input tax credit can only be claimed on input services and not on procurement of goods, import of aircraft and spares. For premium travel, full input tax credits can be reclaimed on both input goods and services. Economy class tickets attract 5% GST, while it’s 12% for business class travel.
