Clarification on GST Application to Airport Levies and Airline Responsibilities
<p>The Ministry of Finance, through Circular No. 115/34/2019-GST, issued clarifications regarding the Goods and Services Tax (GST) on airport levies such as Passenger Service Fee (PSF) and User Development Fee (UDF). The circular emphasizes the distinction between services provided by airlines and those provided by airport operators and outlines the specific GST liabilities.</p><p><strong>Key Highlights:</strong></p><ul><li><strong>GST on PSF and UDF:</strong> The Passenger Service Fee (PSF) and User Development Fee (UDF) charged by airport operators for passenger services are subject to GST. These charges are collected by airlines on behalf of airport operators, and airlines act as pure agents.</li><li><strong>Airlines' Role as Pure Agents:</strong> Airlines, when collecting PSF and UDF, must act as pure agents, meaning they recover only the actual amounts incurred on behalf of the passengers. The airlines are not liable to pay GST on these charges but must separately indicate the GST payable on PSF and UDF in invoices to passengers.</li><li><strong>GST Liability for Airport Operators:</strong> While airlines collect these fees, airport operators are responsible for paying GST on the PSF and UDF collected. The collection charges paid by airport operators to airlines for their role in collecting these fees are subject to GST under a forward charge.</li><li><strong>Input Tax Credit (ITC):</strong> Passengers can claim the Input Tax Credit (ITC) on the GST paid for PSF and UDF based on the invoices provided by airlines as pure agents.</li></ul><p>This clarification ensures transparency and uniformity in the implementation of GST across the aviation sector, especially regarding the handling of airport levies by airlines.</p><p><a href="https://cms.plasament.com/storage/chirag-singla/circular-cgst-115.pdf">circular-cgst-115</a><br> </p>