AIRSPACE ON RENT

[Sadanand Bulbule]

Airlines pay fees to use a country’s airspace, also known as overflight fees. These fees are based on factors like the aircraft’s maximum take-off weight and the distance traveled. Countries essentially “rent” their airspace for passage.

Can airspace on “ rent” be included under the segment of supply of services by the Union Government for the purpose of RCM vide Entry No.5 of Notification No.13/2017-CTR dared 28/06/2017? And why?

AI Summary

Reverse Charge Mechanism applies to government charged overflight fees to airlines under GST, creating RCM compliance obligations.
Overflight fees for en route air navigation services provided by the Airports Authority of India qualify as a supply of services by a government instrumentality to business entities and, being outside the precincts type exemption for airport/port related services, are taxable under the Reverse Charge Mechanism; this generates RCM compliance obligations for recipient airlines and raises issues in international billing and interpretational clarity.