India need not impose service tax on overflights: IATA

The International Air Transport Association (IATA) on Tuesday said India need not impose service tax on foreign flights availing its airspace and international tickets besides others to make it easier for foreign carriers to do business in the country.

"The application of service tax should be aligned with a principle that it does not apply to services rendered outside of India including those for overflight charges, global distribution systems, extra baggage fees and international tickets," IATA director general and CEO Tony Tyler said here in an event organised by the association, the civil aviation ministry and industry body CII.

He said there is a need to follow international treaties to protect airlines from double-taxation on their incomes, suggesting the incoming GST regime consider OECD guidelines in imposition of taxes.

Tyler urged the civil aviation ministry to grant jet fuel as "declared goods" status which will limit the tax charged on the item to four percent.

"India needs smarter regulation. This essentially means taking a business-like approach to regulation using common- sense and proven principles," he said.

Tyler also called for allowing the Airports Economic Regulatory Authority (AERA) to conduct its work independently.