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Government bans use of non-scheduled operator’s licence by companies to import aircraft at low rates |
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NEW DELHI: India may bar import of aircraft at low rates by corporate groups for personal and official use in a move likely to generate opposition from companies with large inhouse charter operations.
The aviation regulator, Directorate General of Civil Aviation, (DGCA), has proposed to ban the use of non-scheduled operator's (NSOP) licence by companies to import aircraft at rates as low as 3-4%. While aircraft imported for personal use are taxed higher (19-21%), companies, especially large corporate groups, are able to pay very low rates by securing an NSOP licence.
They create an aviation subsidiary company to house the aircraft. The aircraft are then chartered out to the parent organisations for official and personal use.
The DGCA believes that this is a misuse and wants to reframe the rules by barring such subsidiary companies from letting their parent firms use the aircraft. Companies can still buy aircraft under personal names of promoters or chief executives but must compulsorily fly commercial operations in order to continue with the licence, a stipulation many may find onerous.
The rules, if they are announced in current form, are likely to be greeted by howls of protest from large corporate groups who regularly use aircraft to fly top executives, promoters and their families. RIL and the Adani group are among many high-profile corporate groups who buy aircraft for personal and business use.
Reliance Industries, India's largest private sector company, owns a fleet of aircraft through Reliance Commercial Dealers, which is a non-scheduled operator. Reliance Commercial Dealers charters planes to the group.
An email questionnaire to RIL did not elicit any response till the time of going to print.
"We are aware that a lot of companies do it to avoid paying high taxes," a government official who did not want to be identified said. "Hence, we are planning to bring in rules that will bar any subsidiary general aviation nonscheduled operator from chartering its planes to their parent companies. Plus, rules would also mandate all non-scheduled operators to clock commercial flights to keep their licence."
Indian regulation differentiates airline companies as nonscheduled and scheduled operators.
All business jet operators do not have a schedule and are called non-scheduled operators or NSOP while airlines like Air India and IndiGo are termed scheduled operators (SOP).
A DGCA official added that these rules will ensure more revenues for government and reduce the burden of the regulator.
"Our jurisdiction is much less, if a private person imports an aircraft on his own name. The jurisdiction over an NSOP is much more than someone operating for personal use," he added.
130 REGISTERED NSOPS
About 130 NSOPs are currently registered with the DGCA and a substantial number are believed to be chartering primarily to their promoters. This belief is based on the fact that about 70 of these NSOPs have a fleet of three or less than three aircraft. Industry experts say that the government should abolish tax on the import of aircraft.
"There should not be any tax on the import of aircraft into India since we do not manufacture any aircraft in the country. The rules should be enough to facilitate the maximum utilisation of these assets (read airplanes), as these are expensive assets," said RK Bali, Secretary of Business Aircraft Operators Association.
As part of the new rules, the DGCA is also moving from dividing the sector on the basis of schedules to commercial and non-commercial. Under the new definition, all airline companies that run a company for revenues will be commercial and the rest, who operate it for personal use, will be non-commercial.
Source : economictimes.indiatimes.com
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