India´s business aviation industry is appealing for the authorities to resolve quickly an investigation into the alleged evasion of import taxes for small aircraft and helicopters by several companies and individuals.
New Delhi imposed duties amounting to almost 25% on all aircraft imports in March 2007, but excluded non-scheduled operators two months later after lobbying by the industry. In June this year the customs authority began to investigate allegations that some companies and individuals bought aircraft for personal use without paying taxes by declaring that they were non-scheduled operators.
At least 13 aircraft have been seized and more than 200 purchases are being investigated, say industry sources. Some companies have posted bonds totalling Rp10 billion ($ 229 million) to use their aircraft while the investigations are ongoing, while others have admitted their guilt and paid taxes amounting to almost Rp556 million.
Almost every Indian company that is involved in the aviation business has to provide details about the aircraft that come under its purview. Business jet charter and management firms, however, are peeved at having to provide confidential details about their clients and worried at the prospect that they may have to pay the 25% tax even if they run non-scheduled operations.
"It is like a witch-hunt. The customs officials are asking for details that, frankly, have nothing to do with a tax-evasion investigation. This includes information about our clients, which in our business is meant to be private," says the owner of an aircraft charter company. "We also don´t know if we will be slapped with the taxes as there is a lot of confusion about this issue. We only hope that this is resolved quickly."
Karan Singh, president of lobby group Business Aviation Association of India, says: "We hope that the civil aviation and finance ministries will have a dialogue with the industry to find a reasonable solution. If possible, all taxes on small aircraft should be removed." The long-term benefits to India´s economy and the other fees that aircraft pay once they are flying far outweigh the short-term benefit of import taxes, he adds.