National carrier Air India has told travel agents that they can take the input tax credit with respect to air tickets sold by them under the GST.
The facility will be in place for travel agents for one month starting from September 1 as steps are expected to be mutually decided upon by the civil aviation ministry and the airline industry in the coming months.
With the implementation of the Goods and Services Tax (GST), there is ambiguity on whether a travel agent can take input tax credit.
Travel agents will be construed as a principal customer for Air India whereby they can take input credit of GST charged by the airline. As a result, agents can raise an invoice to their customers for passenger transport service by air, according to a communication from the airline.
In the communication sent out last week, Air India said there is ambiguity in the GST on treatment of travel agents.
The airline has said travel agents would be construed as principal customers for "supply of passenger transportation service by air under GST".
Transactions between the carrier and the travel agent will be on principal to principal basis, the communication said.
"In such a transaction pattern, Air India will issue tax invoice to the agent, as their customers and in turn, such agents will issue tax invoices for passenger transport service by air to the end customer," it noted.
The practical challenges faced by airline industry post GST will be reviewed by the civil aviation ministry on or after October 1, the communication said.
"Post such a review, necessary actions to counter the practical challenges would be mutually decided by the ministry of civil aviation and the airline industry," it added.
The decision will be implemented for one month stating September 1.
The GST came into effect from July 1.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)