Claiming of GST credit for Hiring of Charter Flight
This query is : Resolved
11 February 2021
One of my client had hired the Charter Flight for travelling of 1 of director for official purpose from private operator, will GST credit on the hiring of the said airplane would be eligible or the same would be excluded as per Ineligible Input Tax Credit.
Our contention is that the same is used for official purpose by director. and the close excludes Vessels and Aircraft-17(5) (aa) of CGST Act transportation of passenger.
Our contention is that the same is used for official purpose by director. and the close excludes Vessels and Aircraft-17(5) (aa) of CGST Act transportation of passenger.
06 July 2024
In the context of Goods and Services Tax (GST) in India, the eligibility of Input Tax Credit (ITC) on the hiring of an airplane depends on the specific circumstances and usage as outlined under the GST law. Here are the key considerations:
1. **Applicability of Input Tax Credit (ITC):**
- According to Section 17(5)(aa) of the CGST Act, 2017, input tax credit is ineligible for "goods or services or both used for transportation of passengers." This includes vessels and aircraft used for the transportation of passengers.
2. **Interpretation of Official Purpose:**
- While the flight was hired for an official purpose by a director, the key determinant is whether the aircraft was used for the transportation of passengers. If the flight involved transporting the director or any other individuals, it falls under the category of transportation of passengers.
3. **Exclusion under Section 17(5)(aa):**
- Since the hiring of the airplane involved transportation of passengers (the director), it typically falls under the exclusionary clause of Section 17(5)(aa). This means that input tax credit would generally not be eligible on such expenses.
4. **Specific Circumstances and Documentation:**
- It's crucial to review the specific terms of the charter flight service and how it was utilized. Proper documentation, such as the invoice from the private operator detailing the services provided, should clarify whether the services were purely for passenger transport or included other allowable services under GST.
5. **Consultation with a Tax Professional:**
- Given the complexity and the specific details involved, it's advisable to consult with a tax professional or GST expert who can review the specific transaction and provide guidance tailored to your client's situation. They can also advise on any alternative interpretations or exemptions that may apply based on the exact nature of the charter service.
In summary, while the flight was used for official purposes, the determining factor for GST eligibility revolves around whether the service falls within the scope of transportation of passengers as per the GST law's provisions.
1. **Applicability of Input Tax Credit (ITC):**
- According to Section 17(5)(aa) of the CGST Act, 2017, input tax credit is ineligible for "goods or services or both used for transportation of passengers." This includes vessels and aircraft used for the transportation of passengers.
2. **Interpretation of Official Purpose:**
- While the flight was hired for an official purpose by a director, the key determinant is whether the aircraft was used for the transportation of passengers. If the flight involved transporting the director or any other individuals, it falls under the category of transportation of passengers.
3. **Exclusion under Section 17(5)(aa):**
- Since the hiring of the airplane involved transportation of passengers (the director), it typically falls under the exclusionary clause of Section 17(5)(aa). This means that input tax credit would generally not be eligible on such expenses.
4. **Specific Circumstances and Documentation:**
- It's crucial to review the specific terms of the charter flight service and how it was utilized. Proper documentation, such as the invoice from the private operator detailing the services provided, should clarify whether the services were purely for passenger transport or included other allowable services under GST.
5. **Consultation with a Tax Professional:**
- Given the complexity and the specific details involved, it's advisable to consult with a tax professional or GST expert who can review the specific transaction and provide guidance tailored to your client's situation. They can also advise on any alternative interpretations or exemptions that may apply based on the exact nature of the charter service.
In summary, while the flight was used for official purposes, the determining factor for GST eligibility revolves around whether the service falls within the scope of transportation of passengers as per the GST law's provisions.
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