Govt amends Flyer Data Sharing Rule for Airlines to Prevent GST ITC Claims on Canceled Tickets

The Central Board of Indirect Taxes and Customs (CBIC) has amended the rules for keeping records of aircraft operations with immediate effect. This is made mandatory for all aircraft operators to transfer passenger data 24 hours before departure and at wheels-off time.

Earlier, aircraft operators may transfer data within 24 hours of departure or at wheels-off time (when the aircraft is scheduled to take off).

The new amendment rule removes the same flexibility, mandating the operations to provide passenger information at both times.

The officials stated that the amended guideline has been developed in regard to cases when airlines failed to pay Goods and Services Tax (GST) on cancelled tickets.

Economy class flight tickets are subject to 5% GST, while business class tickets are subject to 12% GST. Businesses can claim ITC on airline tickets if they are for business purposes and provide a GST-compliant invoice.

The Directorate General of GST Intelligence (DGGI) identified that different airlines were collecting GST on last-minute cancellations but were not depositing it with the exchequer.

Various airlines in addition to that claimed Input Tax Credit (ITC) on these cancelled tickets, the official said.