India violates global laws by taxing international tickets

India is levying its standard Goods and Services Tax (GST) even on international airlines, disregarding global airline laws set up by authorities.

The International Air Transport Association (IATA) has rebuked India for taxing international tickets and violating global norms by doing so.

IATA, the association of world airlines, had asked governments to facilitate the growth of worldwide connectivity by avoiding creeping re-regulation, maintaining the integrity of global standards and addressing a capacity crisis. “We must take governments to task. It is unacceptable that global standards are being ignored by the very governments that created them,” IATA’s director general and CEO Alexandre de Juniac told the Indian press at the opening session of the 74th IATA Annual General Meeting and World Air Transport Summit.

India has been taxing international tickets opposing the resolutions of the UN body International Civil Aviation Organisation (ICAO). “India helped develop ICAO resolutions prohibiting tax on international tickets. Yet it persists in taxing international travel,” Juniac added.

India levies the Goods and Services Tax (GST) on international air tickets, especially business class. The tax was implemented on July 1, 2017 and covers airline products and services including tickets, ancillary, change, refund, other products and fees.

“On aviation’s core mission to deliver safe, secure, accessible and sustainable connectivity, the state of our industry is strong and getting stronger. And with ‘normal’ levels of profitability we are spreading aviation’s benefits even more widely. But there are challenges. Smarter regulation needs to counter the trend of creeping re-regulation. Global standards must be maintained by the states that agreed (upon) them. And we need to find efficient solutions to the looming capacity crisis,” Juniac said.

Juniac also commented on the impact new trade norms in the US would have on the aviation industry, especially in terms of cargo movements and business travel. “The forces of protectionism are gathering strength. Sanctions, tariffs and geopolitical conflicts are the mainstay of daily news. The spectre of trade war looms. Debates on migration and immigration rage and trust among nations is showing fragility,” the IATA chief added.

Commenting on the tax norms, Juniac said that it is “a challenging industry to operate”, adding “high taxes, costly and ill-conceived regulation, infrastructure capacity constraints, market shifts and the demands of labour are the ‘normal’ repertoire.” “Protectionism could derail successful international joint ventures,” the media quoted him.