The aviation sector is likely to face "teething problems" for four to six months due to the implementation of the Goods and Services Tax (GST), SpiceJet CMD Ajay Singh said today.
He, however, said his airline was "fully prepared" to usher in the indirect tax regime from July 1, and that airlines were working along with the government to resolve any concern.
The aviation ministry had earlier sought postponement of the GST implementation by two months on the ground that airlines needed more time to revamp their systems to comply with the new tax regime.
In a U-turn, the ministry later said it was prepared for the GST roll-out from the stipulated date.
"I think it is a revolutionary reform and the government needs to be lauded for its courage to go forward with such a big reform. Any such reform will have its share of teething problems and so will this one," Singh told reporters at an event here.
Double taxation on import of aircraft wherein their import as well as leasing of the same plane will invite separate taxes is an area of concern that the airlines have shared with the government, he said.
The SpiceJet CMD said input tax credit being not available for economy class tickets -- a segment where there are more number of passengers, was another matter of concern.
Input tax credit allows an entity to deduct the levies paid for the inputs while paying the taxes on the final output. Since GST is applicable for goods as well as services, input tax credit provides a leeway for the entities concerned.
"We will wait for a clarification," he said.
"Any reform of this magnitude will have its share of problems and this one will too. It will take four to six months (to resolve them)," Singh noted.
Airline officials have maintained that making changes in the global ticket distribution system to ensure compliance with GST would take time. Airlines are also in a fix over the possibility of movement of stocks, equipment or aircraft parts being taxed under the new taxation policy.
Global airlines body International Air Transport Association (IATA) has also sought clarifications on the tax treatment for the aviation sector under GST and claimed there were "information gaps".
On the impact of demonetisation, the SpiceJet CMD said the airline's yields had improved and that the impact of the note ban came down over the past two quarters.
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