Global airlines' grouping IATA on Tuesday said India has a complex taxation system and "greater certainty" on taxes will be important to exploit the potential of the country's fast growing civil aviation market.
India is among the civil aviation markets that has incredible growth opportunities and its growth rate is expected to surpass that of China, IATA Director General Willie Walsh said.
Against the backdrop of some foreign airlines receiving tax notices in India in recent times, Walsh said "India has a very complex tax system and it has been a feature of our industry for many years. So, it is not a new issue".
For the country to fully exploit the potential and to translate the vision into a reality, Walsh said the issue of taxation does have to be addressed.
"That's not to say that you have to eliminate the taxation, but I think you do need to have a clearer understanding as to how the taxation rules apply," Walsh said at a briefing in the national capital in response to a PTI query.
Elaborating on the issue, he said that airlines sometimes get a new interpretation of an existing rule that's completely different to the way it was interpreted previously.
Such a situation then leads to a claim for taxes that haven't been paid and it leads to years of litigation and discussions which eventually get resolved. In many cases it gets resolved in favour of the airline, Walsh noted.
Going forward, he said, "if India is to genuinely exploit the massive opportunity that exists here, greater certainty around the taxation would be important".
The International Air Transport Association (IATA) represents over 350 airlines, including Air India, IndiGo and SpiceJet, that account for more than 80 per cent of the global air traffic.
The grouping has also been vocal about airport charges being higher in various parts of the world.
Explaining IATA's view on the issue, Walsh said airlines want efficient airport operations at a cost-effective price. "We want to see airports make sensible long-term investments that can be afforded by the industry".
While mentioning that there will always be issues about airport charges, Walsh said that between the airline industry and the airport industry, there is probably "common ground on 80 per cent of issues and then 20 per cent, the way I describe it, is violent disagreement, which typically relates to financing and financial issues".
According to him, there needs to be more dialogue between airlines and airports.
"I think many airports around the world, I'm not just picking on India here, don't fully understand the needs of the airlines and all we get is development that is not appropriate for the airlines that operate at the airport or more expensive than the airline believes it needs to be," the IATA DG said.
IATA held its Annual General Meeting (AGM) in the national capital from June 1-3 and the meeting happened for the first time in India in 42 years.
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