Air India shifts GST invoicing work to agents

Air India has dubbed travel agents its "principal customers" and wants them to shoulder the task of the goods and service tax-related invoicing of corporate customers.

The move will reduce the workload of the airline. But agents may have to hire more staff to complete the formalities.

Under the GST, economy-class air travel and business-class travel is charged at 5 per cent and 12 per cent, respectively. Companies purchasing tickets for staff travel can claim an input credit on tax payment. A tax invoice needs to be issued and details of invoices need to be uploaded on the GSTN portal to enable companies to claim input credit. Air India wants agents to handle GST-related invoicing, travel industry sources said.

Air India issued a circular to all agents last week and said the new procedure would come into effect from September 1. In the circular, the airline has categorized travel agents as its principal customers for purpose of air travel under the GST. "Air India shall not be responsible for non-issuance of tax invoice or loss of GST credit, if any, to the end customers. All such responsibilities shall rest with the agents," the airline said in the circular.

"The communication issued by Air India needs to be examined from a legal perspective," said Anita Rastogi, partner (indirect tax) at PwC. At present, no other airline has issued similar instructions. Agents expect other airlines to follow suit.

Air India's move adds to the workload of agents and could require them to hire staff and invest in software. "Even now we are issuing tax invoice on service or transaction charges to our customers and airline would have issued another invoice for a ticket. So that duplicity is avoided now. Also, it is good from the perspective of client confidentiality as the airline will not send tax invoice directly to our customers," an executive member of the Travel Agents Federation of India said.

"It is amply clarified that Air India has not decided to pass on its responsibility to the travel agents," the airline said in a response to a query. “Air India will issue tax invoice to the agent, and in turn, such agents will be required to issue tax invoices to the end customers. In short, the tax invoice will be issued to the GSTN provided at the time of booking, which could be either the agent or the end customer. However, the responsibility of carriage lies with Air India."