Allow airlines to use GST credit on spares for economy-class operations

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After failing to get any major stimulus for the airline sector, major domestic airlines want the Government to allow the GST credit on spares to be used for economy class operations. The GST paid on spares has been a significant cost for the airline operations.

This is because the current GST legislation does not allow credit of the GST paid on goods to the extent of use in “economy class” operations which form the major revenue stream for the sector.

Covid-19 pandemic has led to significant losses for the aviation sector which was already suffering because of the competitive prices in the Indian market and rising costs of ATF.

While the current situation has led to decreased costs of ATF because of the fall in crude prices globally, it is not sufficient enough to tide over the current crisis, top airline executives and analysts told BusinessLine. The accumulated credit during the current period is worth ₹500-600 crore, they said.

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