Airlines call for delay in GST roll-out citing technical issues

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London Heathrow, United Kingdom - May 25, 2013: An Air India Boeing 787 Dreamliner with the registration VT-ANK on approach to London Heathrow Airport (LHR) in the United Kingdom. The Boeing 787 Dreamliner is the world's first major airliner to use composite materials in the construction of its airframe. Air India is the flag carrier airline of India with 99 planes in operation.

New Delhi: Airlines in India have sought a delay in the roll out of the goods and services tax (GST) on technical grounds.

Most airlines are dependent on global computer reservation systems for ticket bookings that are hosted abroad and need to be changed to allow for new entries, a person with knowledge of the matter said, declining to be named.

Full-service airlines such as Air India, Jet Airways and Vistara use a ticketing system for bookings that serves over 800 airlines internationally, and will take slightly longer to be tweaked compared with those used by budget airlines.

Low-cost airlines like IndiGo, SpiceJet and AirAsia use Navitaire. GoAir uses the Radixx passenger booking system.

The aviation ministry has also written to revenue secretary Hasmukh Adhia.

“Considering the compliance requirements under GST, significant amendments would be required in the GDS (global distribution system) for generating tickets as per the GST invoice rules. It is therefore requested that time up to 1 September may be considered for implementation,” the letter said, according to the person cited earlier.

The current compliance date is 1 July. The ministry has not heard back from Adhia yet, he added.

The airlines have also asked for three more clarifications on some of the GST rules, said another person who did not wish to be named. These include taxation on international flights and input credit for economy class tickets.

“The key issue is GDS, which they are asking to be resolved,” this person said.

Airlines did not offer any comment on the subject.

GST subsumes excise and service tax and other local levies and unifies India into a common market. Economy class air travel is expected to become marginally cheaper, with the GST rate fixed at 5%, against the existing 6%. However, for business class, the tax rate will rise from 9% to 12%.