GST IMPACT

ON
AIR INDIA
CONTENTS

S.No. Topics
* Title page
* Certificate
* Acknowledgement
* Executive summary
* Table of contents
1. Chapter 1- Introduction
 1.1 – History
 1.2 – Post independence
 1.3- Merger & post merger problems
 1.4 –AIR INDIA– privatization
 1.5 – Project review
 1.6 – Theoretical framework of GST
 1.7 – Objectives of study

2. Chapter 2- Research methodology

 2.1 - Research design & scope of study
 2.2 - Data collection instruments &
procedures
 2.3 - Indian taxation system(old)
 2.4 - Goods and services tax(GST)
 2.5 - Impacts of GST on AIR INDIA

3. Chapter 3- Data analysis & interpretation

 3.1 - Comparison of Prices – Pre and Post GST
 3.2 - AIR INDIA : meals airline
 3.3 - Analysis and interpretation of employees
perception
4. Chapter 4- Findings & conclusion

References, Annexure, bibliography

CHAPTER 1
 1.1 HISTORY

o The airline was founded by J. R. D. Tata as Tata Airlines in1932.

o Tata himself flew its first single-engine de Havilland Puss Moth,

carrying air mail from Karachi to Bombay's Juhu aerodrome and
later continuing to Madras (currently Chennai).

o After World War II, it became a public limited company and was
renamed as Air India.

o On 21 February 1960, it took delivery of its first Boeing 707

named Gauri Shankar and became the first Asian airline to
induct a jet aircraft in its fleet. In 2000–01, attempts were made
to privatize Air India and from 2006 onwards, it suffered losses
after its merger with Indian Airlines.
o In its first year of operation, the airline flew 160,000 miles
(260,000 km), carrying 155 passengers and 9.72 tones (10.71
tons) of mail and made a profit of₹60,000.
o Later, the airline launched a domestic flight from Bombay to
Trivandrum with a six- seater Miles Merlin.
o In 1938, it was re-christened as Tata Air Services and later as Tata
Airlines.
o During the Second World War, the airline helped the Royal
Air Force with troop movements, shipping of supplies, rescue
of refugees and maintenance of aircraft.

o LOGO:

• The logo of the new airline is a red colored flying swan

with the ‘Konark Chakra' in orange, placed inside it.

• The flying swan has been morphed from Air India's

characteristic logo, 'The Centaur', whereas the 'Konark
Chakra' is reminiscent of Indian’s logo.

o SLOGAN:Air India... Truly Indian

o MASCOT:
• Air India's mascot is the Maharajah (Emperor).

• It was created by Bobby Kooka, the then-commercial

director of Air India, and Umesh Rao, an artist with J.
Walter Thompson Limited in1946.

• Kooka stated that, "We call him a Maharajah for want of

a better description. But his blood isn't blue. He may look
like royalty, but he isn't royal".

• Air India adopted the Maharajah as its mascot in 1946. It

was used in promoting it although initially designed only
for the airline’s memo-pads.

• The Maharajah was given a makeover in 2015 and the

brand is represented by a younger version.

• PARENTCOMPANY: Air India Limited

o CHAIRMAN & MD : MR. ASHWANI LOHANI

o WEBSITE: airindia.in
 1.2 POST INDEPENDENCE

After World War II, regular commercial service was restored in India and Tata
Airlines became a public limited company on 29 July 1946 under the name Air
India.

o After Indian independence in 1947, 49% of the airline was

acquired by the Government of India in1948.

o In 1953, the Government of India passed the Air Corporations Act

and purchased a majority stake in the carrier. The company was
renamed as Air India International Limited.

o On 21 February 1960, Air India International inducted its first Boeing

707–420, thereby becoming the first Asian airline to enter the Jet
Age.
o On 8 June 1962, the airline's name was officially truncated to Air
India.

o On 11 June 1962, Air India became the world's first all-jet airline.

o In 1993, Air India took delivery of a Boeing 747-400 named

Konark and operated the first non-stop flight between New York
and Delhi.
 1.3 MERGER & POST MERGER PROBLEMS
*MERGER

o In 2007, the Government of India announced that Indian would be

merged into Air India
o . Air India became the 27th member of Star Alliance on 11
July2014.
o As part of the merger process, a new company called the National
Aviation Company of India Limited (now called Air India
Limited) was established, into which both Air India (along with
Air India Express) and Indian (along with Alliance Air) would be
merged.

Reasons that led to the Merger:

 Escalating costs of Aviation Turbine Fuel(ATF)

 Immense competition from private and low cost airlines

 Increased cost pressures due to acquisition of additional aircraft

What the merger tried to achieve:

 Economies of scale in areas such as maintenance, ground operations, the

use of landing slots and parking rights etc

 Volume Discounts in areas such as fuel purchase, insurance.

 Increased fleet size such that the combined fleet was of over120 aircraft,
currently over 150 aircraft, placing it among the top 10 airlines in Asia,
and the top 30 in the world.
* Post-Merger Problems

Incomplete integration of official positions, of IT systems and as well as infrastructure

due to different aircraft flown by the two companies, and inability of employee unions
to accept merger
1. Decline of customer service due to integration issues

2. Ballooning of losses due to:

3. decreased passenger traffic during recession

4. Unnecessary and costly acquisition of aircraft lee

 Increased competition from domestic airlines as well as international
airlines due to unfavorable government policies.
 1.4 AIR INDIA PRIVATISATION

 On 28 June 2017, the Government of India announced the privatization

of Air India. A committee was set up to start the process.
 It has both positive as well as negative
aspects: POSITIVE:
• Debt burden will be reduced. Currently Air India has more than Rs.
50,000 crores debt due to maintenance expenses.
• Privatization will increase competition and hence the quality of
services will be improved.
• Air India’s market share in Aviation industry is just 14%. So, it is
not wise to spend Rs. 50,000 crores public money on Air India.

NEGATIVE:
• Instead of privatizing, granting autonomy can lift Air India from
losses according to employee unions. They opine that too much
government control caused losses to Air India.
• Employee unions are arguing that privatization will lead to job
losses especially for those who fall in the reserved categories as
private sector has no obligation to follow the reservation policy.
• Air India has to clear the salaries due to its staff. Privatization move
without clearing these dues will create uncertainty.
•

CONCLUSION:

It’s better to privatize commercial things and government should concentrate on

welfare schemes. In case of high price rises due to privatization, government
can impose restrictions on rates
 1.5 Project review

The chapter is organized into three parts. The first part consists of MODVAT.
The second part describes the empirical study of GST and the third part
consists of theoretical framework of GST.

 MODVAT

The reform process of India's indirect tax regime was started in 1986 by
Vishwanath Pratap Singh with the introduction of the Modified Value Added
Tax (MODVAT). A single common "Goods and Services tax (GST)" was
proposed and given a go-ahead in 1999 during a meeting between then Prime
Minister Atal Bihari Vajpayee and his economic advisory panel, which
included three former RBI governors IG Patel, Bimal Jalan and C Rangarajan.
Vajpayee set up a committee headed by the finance minister of West Bengal,
Asim Dasgupta to design a GST model.

 Poirson (2006) examines the Indian tax system from the perspective of how
effective it is towards encouraging growth of the economy. He compared the
Indian tax system to other countries and concluded that Indian economy is
highly indirect tax dependent, effective tax rates and productivity are lower,
and marginal tax rates are higher. He also concluded that indirect taxes are a
big contributor of total taxes which can be regressive, effective tax rates are
lower and marginal effective tax rates are high. The proposed tax reforms
including introduction of GST is expected to improve tax productivity and
reduce the marginal effective tax rates.

 Ahmad (2007) examines the proposed GST to be introduced in India,

specifically in relation to the place of supply rules for services to be adopted,
the method to apply dual GST. He also discussed the options to introduce the
dual GST in India which could be Concurrent Dual GST, National GST or
State GST.
 Halakhandi (2007) GST was supposed to be introduced in India way back in
2010. It has been getting postponed due to various reasons. He discussed the
existing laws in India for indirect taxes, the VAT laws in various states with
their advantages and disadvantages and then he analyzed the impact of
proposed GST, compliances under the proposed GST with the help of various
numerical examples.

 NCAER (2009) In this the authors discussed about the introduction of GST in
India that would lead to benefits like increase in efficiency in use of energy,
increase in general economic welfare, increase in the exports, increase in the
GDP, increase in the return on capital, optimum returns and allocation of the
factors of production, reduction in general price level, etc. Then they discussed
that how indirect taxes have always been a major contributor in the GDP in
India as compared to most countries. Then they discussed that with the
introduction of GST, resources would be used better; the tax could become
environment friendly. They also suggested that there should be fewer taxes,
most indirect taxes should be subsumed within the GST, and there should be
very few exemptions.

 Satya Poddar (2009) studied, “Goods and Service Tax Reforms and
Intergovernmental Consideration in India” and found that GST introduction
will provide simpler and transparent tax system with increase in output and
productivity of economy in India. But the benefits of GST are critically
dependent on rational design of GST.
 1.6 Theoretical framework of GST
GST is one of the biggest tax reforms in India aiming to integrate State
economies and boost overall growth by creating a single, unified Indian
market to make the economy stronger. GST is a comprehensive destination
based indirect tax levy of goods as well as services at the national level. Its
main objective is to consolidate multiple indirect tax levies into a single tax
thus subsuming an array of tax levies,overcoming the limitations of existing
indirect tax structure, and creating efficiencies in tax administration.

 GST is consumption or destination based tax levied on the basis of the

“Destination principle. Simply put, Goods and Services Tax is a tax levied on
goods and services imposed at each point of supply. Such GST is on entire
goods and services, except some exempted class of goods or services or a
negative list of goods and services on which GST is not levied

 Single Umbrella Tax Rate:

 GST shall replace a number of indirect taxes being levied by Union and State
Governments.

Removing Cascading Effect:

 GST is intended to remove “Tax on Tax Effect” and provide for common
national market for Goods and Services.
 1.7 OBJECTIVES OF STUDY
o To study the impact of taxation especially after the introduction of GST on
the operations of AIR INDIA.

o To study the perception of the employees of finance department regarding

GST.

o To study the earlier and current tax system and study the comparison
between old and new taxation system.

o To study the positives and negatives of GST in airlines.

Chapter 2
 2.1 RESEARCH DESIGN & SCOPE OF THE STUDY

The study will adopt a cross-sectional descriptive design since it focuses at one point
in time.

Descriptive research methods are pretty much as it sound- they describe situations.
They do not make accurate predictions and they do not determine cause and effect.

Cooper and Schindler (2010) recommend descriptive survey design for its ability to
produce statistical information about aspects of education that interest policy makers
and researcher. The method is rigid and focuses on the objectives of the study

*Target Population

A population refers to an entire group of individuals, events or objects having a

common observable characteristic. The study shall focus on the Taxation policy of
Air India. The population for the study comprises of the Employees in the Finance
department of Air India .The study will adopt judgmental sampling giving a sample
size of 20 respondents limited to the permanent employees in finance department of
air India at northern region only.

SCOPE OF THE STUDY

The scope of this study is limited to the study of Impact of GOODS AND SERVICES
TAX at AIR INDIA. The scope encompassed with the taxation department of the
company which is a part of finance and accounting department.
 2.2 DATA COLLECTION INSTRUMENTS & PROCEDURES
This project report is based on primary data as well as secondary data. A structured
questionnaire will be used to collect Primary data. The questionnaire is preferred in
this study because respondents of the study are assumed to be literate and quite able
to answer questions asked adequately. It contains questions, having specific
responses to a broad range of questions .Secondary Data is basically a kind of data
that has been collected through secondary sources like past researches, internet, text
books and journals etc. It includes census, large surveys, organizational records etc.

 It is a PRIMARY data as it is :

- Collected from the field under the control and supervision of the
investigator.

- Collected specially for the purpose in mind.

- Generally afresh and collected for the first time.

- Useful for current studies as well as for future studies

- Not presented on Google

 It is a secondary data as it is:

- gathered from different sources like publications, newspapers, etc.

- It is a summary of a book or a set of records.

- Data collection is less time consuming.

- It provides a larger database of information.

- Helpful in testing the hypothesis

 2.3 INDIAN TAXATION SYSTEM

TAX
A compulsory contribution to state revenue, levied by the government on workers'
income and business profits, or added to the cost of some goods, services, and
transactions.

TYPES OF TAXES

DIRECT TAX:

A tax, such as income tax, which is levied on the income or profits of the person
who pays it, rather than on goods or service.

INDIRECT TAX:
A tax levied on goods and services rather than on income or profits.
OLD TAX SYSTEM

- DIRECT TAX
A direct tax is paid directly by an individual or
organization to an imposing entity. A taxpayer, for
example, pays direct taxes to the government for
different purposes, including real property tax, personal
property tax, income tax or taxes on assets. Direct taxes
are different from indirect taxes, where the tax is levied
on one entity, such as a seller, and paid by another

Direct taxes are based on the ability-to-pay principle. This principle is an economic
term that states that those who have more resources or earn higher income should
pay more taxes. The ability to pay taxes is a way to redistribute the wealth of a
nation. Direct taxes cannot be passed onto a different person or entity; the individual
or organization upon which the tax is levied is responsible for the fulfillment of the
full tax payment.
Corporate taxes are a good example of direct taxes. If, for example a manufacturing
companyoperateswith$1millioninrevenue, $50,000 in cost of goods sold(COGS)and
$100,000 in total operating costs, its earnings before interest, taxes, depreciation, and
amortization (EBITDA) would be $400,000. If the company had no debt,
depreciation or amortization, and had a corporate tax rate of 35%, its direct tax
would be $140,000, derived as: ($400,000 * 0.35) = $140,000.
- INDIRECT TAX:

An indirect tax is a tax that is paid to the

Government by one entity in the supply chain, but it is
passed on to the consumer as part of the price of a good or
service. The consumer is ultimately paying
The tax by paying more for the product.
An indirect tax is shifted from one tax payer to another.

BREAKING DOWN ‘Indirect Tax' -

Import duties, fuel, liquor and cigarette all considered to be the examples of
indirect taxes. Indirect taxes are defined by contrasting them with direct taxes. In
the case of direct taxes, the person immediately paying the tax is the person that
the government is seeking to tax.
Income tax is the clearest example of a direct tax, since the person earning the
income is the one immediately paying the tax. Admission fees to a national park is
another clear example of direct taxation.

Examples of Indirect Taxes

The most common example if an indirect tax is import duties. The duty is paid by the
importer of a good at the time it enters the country. If the importer goes on to resell
the good to a consumer, the cost of the duty in effect is hidden in the price that the
consumer pays.
The consumer is likely to be unaware of this, but he will nonetheless be indirectly
paying the import duty.

OLD TAX REGIME

DRAWBACKS OF OLD TAX SYSTEM (earlier)
There are still problems with the system that have not been solved.

What are they?

• The credit of Input VAT was available against Output VAT. In
the same manner, the credit of input excise/service tax was
available for set-off against output liability of excise/service tax.
However, the credit of VAT was not available against excise and
vice versa.
• VAT was computed on a value which includes excise duty, and
no CENVAT credit is allowed for it. This shows that there is a tax
on tax!

Central and State Governments Tax

Excise duty and service tax was levied by the Central Government, while the VAT
was levied by the State Government, which was one of the reasons why such a
cross-utilization of credits was not allowed. However, this does not constitute a
valid reason that justifies the cascading effect of taxes.

ALL THESE DRAWBACKS LEADS TO THE EMERGENCE

OF GST (GOODS AND SERVICES TAX)

NEED FOR GST

o The GST shall subsume all the above taxes, except the Basic Customs
Duty that will continue to be charged even after the introduction of
GST. Other indirect taxes, such as stamp duties etc. shall also continue.
o India shall adopt a Dual GST model, meaning that the GST would be
administered both by the Central and the State Governments. This
makes it the first tax of its kind in India.
 2.4 GOODS AND SERVICES TAX (GST)

“One nation one tax”

 GST is one indirect tax for the whole nation, which will make India
one unified common market.
 It is a kind of VATwith the difference that it includes services as well.
(Kind of VAT here means that its working is similar to VAT).
 Only one indirect tax has to be paid by the trade and industry instead
of several other indirect taxes.
 GST will be applicable on – SALE, MANUFACTURING, and
CONSUMPTION OF GOODS ANDSERVICES.
 GST will not be applicable on – EXPORT (custom duty), DIRECT
TAXES (income tax and wealth tax).
 GST is a destination based tax.

Importance of GST

 Goods and Services Tax will address the issue of DOUBLE TAXATION
after it is implemented
 It has a system of Input Tax Credit which will allow sellers to claim the
tax already paid, so that the final liability on the end consumer is
decreased.
3 kinds of applicable Goods and Services Taxes:
 CGST: where the revenue will be collected by the central government.
 SGST: where the revenue will be collected by the state governments for
intra-state sales.
 IGST: where the revenue will be collected by the central government for
inter-state sales.

TRANSACTION OLD POLICY NEW POLICY

Sale within the state VAT + Central Excise/Service CGST + SGST

tax

Sale to another State Central Sales Tax IGST

+Excise/Service Tax

TAXES SUBSUMED BY GST:

At the Central level, the following taxes are being subsumed:

• Central Excise Duty,

• Additional Excise Duty

• Service Tax,

• Additional Customs Duty commonly known as Countervailing Duty,

and

• Special Additional Duty of Customs

At the State level, the following taxes are being subsumed:

1. Subsuming of State Value Added Tax/Sales Tax,

2. Entertainment Tax (other than the tax levied by the local bodies), Central
Sales Tax (levied by the Centre and collected by the States),
3. Octroi and Entry tax,

4. Purchase Tax, Luxury tax

 BENEFITS OF GST:

 Easy compliance: A robust and comprehensive IT system would

be the foundation of the GST regime in India. Therefore, all tax
payer services such as registrations, returns, payments, etc. would
be available to the taxpayers online, which would make
compliance easy and transparent.

 Uniformity of tax rates and structures: GST will ensure that

indirect tax rates and structures are common across the country,
thereby increasing certainty and ease of doing business. In other
words, GST would make doing business in the country tax
neutral, irrespective of the choice of place of doing business.
o Removal of cascading: A system of seamless tax-credits
throughout the value-chain, and across boundaries of States,
would ensure that there is minimal cascading of taxes. This
would reduce hidden costs of doing business.
o Improved competitiveness: Reduction in transaction costs of doing business
would eventually lead to an improved competitiveness for the trade and
industry.
oGain to manufacturers and exporters: The subsuming of major Central and
State taxes in GST, complete and comprehensive set-off of input goods and
services and phasing out of Central Sales Tax (CST) would reduce the cost of
locally manufactured goods and services. This will increase the
competitiveness of Indian goods and services in the international market and
give boost to Indian exports.
 2.5 IMPACT OF GST ON AIR INDIA

GST definitely will have an impact on the working of Air India in the
following ways:

A) Impact of GST on Prices of Air Ticket:

• OLD Taxation vs. New Regime

GST will impact both economy class prices and business prices as
earlier Service Tax was applicable on all bookings made both for the
economy class and for business class. Tax rate under the earlier
regime was:

In the new regime, the Government has lowered the tax rate for economy
class flight tickets to 5%. Whereas the business class tickets will attract a
higher tax at 12% after GST implementation from 1 July. So, the revised
scenario will be:
B) Input cost of Jet Fuel /Aviation Turbine Fuel:

ATF will not be included within the GST regime and therefore the
Central and State governments will continue to impose excise duty and
Value Added Tax (VAT), respectively. Since the levy of these taxes will
not be creditable for carriers under the GST regime, it will result in a
cascading effect of taxes.

C) Leasing of Aircraft:
 Industry was facing a dual levy of 5 per cent at the time of import and
another 5 per cent at the time of payment of lease rent.
 Concerns were raised by the civil aviation ministry before the revenue
department.
 The finance ministry in a notification said that airlines would not have
to pay GST on import of aircraft and its parts if GST was paid on their
lease.

EARLIER - 5%atthetimeof IMPORT OF AIRCRAFT

ORITSSPARE PARTS AND 5% at the time of PAYMENT OF
LEASE.

NOW - 5% at the time of PAYMENT OF LEASE ONLY

D) Repair and Maintenance:

• Earlier both Service Tax and VAT were charged on

repair and maintenance of aircraft resulting in higher
tax burden.
• Under GST model, It is expected to treat pure service
transaction where supply include both goods and
services thus helps in removing the cascading effect .
• EARLIER: VAT and SERVICE TAX because of
which ITC cannot be availed
• PRESENTLY: GST in which ITC can be availed by
the airline.
E. Compliance Cost:

• Under Previous Tax Law, only single registration of

service tax was required to take.

• Now under GST, registration is required to take in

every state from where supply is take places.

• Thus, Carrier has to take registration in every state

where passengers is located and from where the flight
embarks.
 3.
DATA
PRESENTATION
& ANALYSIS
 3.1 Comparison of Prices – Pre and Post GST

Domestic air travel is clearly going to see a boost post GST with air prices
reducing. Budget travelers, therefore, have a reason to cheer and plan for
the upcoming holidays. The difference can be seen in the table below:

On the other hand the business class fares are going to cost higher,
however, it is only a marginal increase from 9% to 12%. This slight
increase in travel prices is probably not enough to deter business travelers
from their travel plans.

The reduction in tax rate is positive for low-cost domestic carriers. However, it
remains to be seen if the Air India will be willing to pass on the benefits of the
reduced tax rate to customers. A major portion of the revenue generated from
Air India comes from economy travelers.
 3.2 AIR INDIA: MEALS AIRLINE
 Food for a Maharajah now at your table. Talk about a nation that
prides itself in having nature’s bounty, the earliest civilizations, a
rich and varied cultural heritage, a glorious past… and you can
expect the perpetuations of a great legacy. That’s India
 Despite its unparallel dietary range, there’s something mystical and
intrinsic about all Indian food: the reverence and thoughtfulness with
which it is prepared.
 The exotic blend of herbs and spices, and the intricate preparatory
methods, are all intended to let the aromas and flavors sink into the
fare and your senses.

* IMPACT OF GST ON HOT MEALS PROVIDED BY AIR INDIA

Air India used to pay VAT and SERVICE TAX on meal to caterers earlier.
VAT was a part of the cost since it was a state tax. Moreover, AIR INDIA
was not in a position to avail the benefit of INPUT VAT, since there was no
output vat charged by Air India on any item.

Though Air India was also paying service tax to the caterers which they
were claiming under CENVAT. Due to not claiming of input vat, Price of
the ticket is inclusive of double taxation (cascading effect) i.e. SERVICE
TAX ON VAT (VAT given by airline to the caterers)

Under GST MODEL, there is NOTHING LIKE DOUBLE TAXATION as

input tax credit of the taxes paid on the meal by air line can be availed
leading to reduction in the price of air ticket.
Let us understand it by the hypothetical example:

We are assuming VAT 12.5%, service tax 6.9% on meal; 15% service tax
and GST rates 18%
* OLD TAX SYSTEM

PARTICULARS AMOUNT

Base fare (A) 200

(+) meal charges
Price100
VAT

(12.5%of100) 12.5

Service tax
120.26
(6.9%of 112.5) 7 .76

Less: CENVAT(only for service tax, not for VAT) (7.76)

Final Price charged for meal(B) 112.5

Service tax{5.6%% of (A+B)}=C 17.5

Final price of the ticket (A+B+C) 330

*NEW TAX SYSTEM (only for economy class)

PARTICULARS AMOUNT

Base fare (A) 200

ADD: Meal charges

Price 100

GST 18% of100 18 118

Less: CENVAT( GST paid on meal) ( 18 )

Final price charged for meal(B) 100

ADD: GST( 5% OF {A+B}) = C 15
FINAL PRICE OF TICKET( A+B+C) 315

NOTE:

Input tax credit of VAT cannot be availed from service tax because service
tax goes to central government and VAT goes to state government, because
of which the amount of VAT gets added to the cost of meal provided by
airline in the flight and the whole scenario leads to DOUBLE TAXATION.
 *ULTIMATE EFFECT OF GST

S.NO FACTORS EFFECT

1. AIR FARES(ECONOMY CLASS) DECREASED

2. ATF FUEL NO IMPACT

3. LEASING COST DECREASED

4. REPAIRS AND MAINTENANCE DECREASED

5. COMPLIANCE COST INCREASED

6. MEAL COST (ECONOMY COST) DECREASED

Air India to post operating profit of Rs 300 crores this financial year

ANALYSIS:

• Air India is projected to post an operating profit of Rs

300 crore in the current fiscal year.
• The operating losses of the company have been steadily
coming down over the past few years.
• The carrier's net losses are also reducing gradually on
account of the overall improvements in the "operational
and financial performance".
• As per provisional figures for 2016-17, the airline is
projected to see an operating profit of Rs 300 crore and
net loss after tax of Rs 3,643crore.
• Last fiscal, Air India had an operating profit of Rs 105
crore and a net loss after tax of Rs 3,836.77crore.
3.3 ANALYSIS AND INTERPRETATION OF EMPLOYEES
PERCEPTION
*ALL THE DATA UNDER THIS COLLECTED IN 2019, THIS IS A 3 MONTH RESEARCH FROM JAN –

MARCH & AND COLLECTED FROM 100 RESPONDENTS

a. Responses regarding familiarity with the working of GST

Table1
Response category No of respondents Relative frequency
YES 17 0.85
NO 3 0.15

Figure 1

Responses regarding familiarity with the

working of GST

15%

YES NO

85%

Inference:

As per the Figure 1, 85% of the respondents agree that they are familiar with
the working of GST whereas 15% of the respondents are not familiar with the
working of GST.
 b. Responses regarding the preparedness of the organization
to handle/face the introduction of GST.

Table2
Response categories No of respondents Relative frequency

6 3 0.15

10 1 0.05

6.5 1 0.05

4 2 0.1

5 4 0.2

7 4 0.2

8 4 0.2

9 1 0.05

Figure 2

Response regarding preparedness of the

organisation to handle the introductionof GST

5%
15%
1 2 3 4 5 6 7 8
20%
5%
5%

10%
20%

20%
Inference:

o As per the Figure 2, 15% of the respondents give 6 out

of 10 regarding their preparedness of their organization
to handle/face the introduction of GST.
o 5% of the respondents give 6.5 out of 10 regarding their
preparedness of their organization to handle/face the
introduction of GST.

o 5% of the respondents give 10 out of 10 regarding their

preparedness of their organization to handle/face the
introduction of GST.
o 10% of the respondents give 4 out of 10 regarding their
preparedness of their organization to handle/face the
introduction of GST.
o 20% of the respondents give 5out of 10 regarding their
preparedness of their organization to handle/face the
introduction of GST.
o 20% of the respondents give 7out of 10 regarding their
preparedness of their organization to handle/face the
introduction of GST.
o 20% of the respondents give 8 out of 10 regarding their
preparedness of their organization to handle/face the
introduction of GST.
o 5% of the respondents give 9 out of 10 regarding their
preparedness of their organization to handle/face the
introduction of GST.
 c. Response regarding fair tax system of GST

Table 3
No of respondents Relative frequency

Yes 17 0.85

No 03 0.15

Figure 3

Response regarding fair tax system of GST

15%

Yes No

85%

Inference:

As per the Figure 3, 85% agree that GST is a fair tax system whereas 15%
thinks that it is not a fair tax system.
 d. Responses regarding compliance of GST is difficult or not

Table 4
Response categories No of respondents Relative frequency

Easier 9 0.45

Difficult 8 0.4

Don’t know 3 0.15

Figure 4

Response regarding compliance of GST is difficult or

not

15%
Easier Difficult Don't know
45%

40%

Inference:

o As per the Figure 4, 45% of the respondents think that

compliance of GST is much easier whereas 40% thinks
that it is difficult
o 15% of the respondents don’t know about the
compliance of GST.
E. Responses regarding handling of current GST with their current
software

Table 5
Response categories No of respondents Relative frequency

Yes 10 0.5

No 9 0.45

Not applicable 1 0.05

Figure 5

Responses regarding handling of current GST with

their current software

5%
Yes No Not applicable

50%
45%

Inference:

As per the Figure 5, 50% of the respondents think that they can handle
the current GST system with their current software whereas 45% think
that they cannot handle the GST system with their current software.
F. Responses regarding time taken by them to reconfigure their
current IT system.

Table 6
Response categories No of respondents Relative frequency

1-2 months 13 0.65

3-4 months 05 0.25

4-6 months 02 0.1

Figure 6

Response regarding time taken by them to reconfigure

their current IT system

10% 1-2 months 3-4 months 4-6 months

25%

65%

Inference:

As per the Figure 6, 65% of the respondents think that their company
will take 1-2 months to reconfigure their current IT system, 25% think
that they will take 3-4 months and 10% of the respondents think that
they will take 4-6 months.
G. Responses regarding biggest challenge for their company
during the transition of GST regime

Table 7
Response categories No of respondents Relative frequency

Product pricing 6 0.3

IT/ system changes 11 0.55

Others 3 0.15

Figure 7

Response regarding biggest challenge for their company

during the transition of GST regime

Product pricing IT/system changes Others

15%
30%

55%

Inference:

o As per the Figure 7, 30% of the respondent think that

the biggest challenge for their company is product
pricing during the transition of GST whereas 55% think
that IT/ system changes is the biggest threat.
o 15% give other reasons like how to take the input tax
credit and how to adjust/reconcile the outstanding tax
liability as on 31/6/2016
 H. Responses regarding whether GST is beneficial for air India

Table8
Response categories No of respondents Relative frequency

Yes 14 0.7

No 06 0.3

Figure 8

Response regarding whether GST is beneficial for

air india

Yes No

30%

70%

Inference:

As per the Figure 8, 70% of the respondents think that GST in beneficial for
air India whereas 30% think that it is not good for air India.
I. Responses regarding GST impact on profits of air India

Table9
Response categories No of respondents Relative frequency

Yes 14 0.7
No 06 0.3

Figure 9

Response regarding GST impact on profits of air india

Yes No
30%

70%

Inference:

As per the Figure9, 70% of the respondents think that GST will impact
positively on Air India whereas 30% think that it will going to have a
negative impact on Air India.
J. Responses regarding whether GST will be a burden to
consumers or not

Table 10
Response categories No of respondents Relative frequency

Yes 8 0.4

No 9 0.45

May be 3 0.15

Figure10

Responses regarding whether GST will be a burden to

consumers or not

Yes No May be
15%

40%

45%

Inference:

o As per the Figure 10, 45% think that GST will not be a
burden to consumers whereas 40% think that it is a
burden.
o 15% doesn’t know about its impact on consumers.
 K. Responses regarding current and earlier tax system

Table 11
Response categories No of respondents Relative frequency

One nation, one tax 18 0.9

One nation, 02 0.1

multiple tax

Figure 11

Responses regarding current and earlier tax system

One nation, One tax One nation, multiple tax

10%

90%

Inference:

As per the Figure 11, 90% of the respondent think that One nation one
tax is better whereas 10% think that One nation multiple tax is better
 L. Responses regarding whether GST will cause higher price of goods
and services or not

Table12
Response categories No of respondent Relative frequency

Yes 10 0.5

No 10 0.5

Figure 12

Response regarding whether GST will cause

higher price of goods and services or not

Yes No

50% 50%

Inference:

As per the Figure 12, 50% think that implementing GST will cause higher
price for goods and services whereas 50% think that it will not cause higher
price for goods and services.
 M. Regarding whether decrease in price of economy class tickets will
boost up the sales or not.

Table 13
Response categories No of respondents Relative frequency

Yes 15 0.75

No 2 0.1

To some extent 3 0.15

Figure13

Responses regarding whether decrease in price

of economy will boost up the sales or not

Yes No To some extent

15%

10%

75%

Inference:

As per the Figure 13, 75% of the respondents think that decrease in price of
economy class tickets will boost up the sales whereas 10% think that it will
not boost up the sales and according to 15% of the respondents it will boost
the sales up to some extent.
 N. Responses regarding rise in the demand for their services by
consumers

Table 14
Response categories No of respondents Relative frequency

Yes 16 0.8

No 4 0.2

Figure14

Response regarding rise in demand for their

services by consumers

Yes No
20%

80%

Inference:

As per the Figure 14, 80% of the respondents think that there will be rise in
the demand for their service by consumers whereas 20% think that there will
be no rise in the demand by consumers.
O. Responses regarding whether GST will require revision in prices of
their goods and services or not

Table 15
Response categories No of respondents Relative frequency

Yes, upward price 10 0.5

revision
Yes, downward price 07 0.35
revision
No revision necessary 01 0.05

Not assessed yet 02 0.1

Figure15

Responses regarding whether GST will require

revision in prices of their goods and services or not

Yes, upward price revision

Yes, Downward price revision
No revision necessary
5%
10% Not assessed yet

50%

35%

Inference:

o As per the Figure15, 50% of the respondents think that GST

will require upward price revision, 35% think that it will
require downward price revision, 5% think that no revision is
necessary of their goods and services.
o 10% of the respondents not assessed yet.
P. Responses regarding impact of GST on working capital requirement

Table 16
Response categories No of respondents Relative frequency

Substantial impact 3 0.15

Moderate impact 5 0.25

Negligible or no 4 0.2
impact
Impact not assessed 8 0.4

Figure16

Responses regarding impact of GST on

working capital requirements

Substantial impact

15% Moderate impact

Negligible or no impact
40%
Impact not assessed as yet
25%

20%

Inference:
o As per the above results, 15% of the respondents think that
there will be a substantial impact of GST on working capital,
25% think that there will be a moderate impact and 20% think
that there will be no impact at all of GST on working capital.
o 40% of the respondent can’t say anything regarding this.
Q. Responses regarding would be impact on their company on account of
increase in rate of tax on services

Table 17
Response categories No of respondents Relative frequency

Substantial impact 5 0.25

Moderate impact 4 0.2

Negligible or no 4 0.2
impact
Impact not assessed 7 0.35

Figure17

Responses regarding would be impact on their

company on account of increase in rate of tax on
services

Substantial impact

25% Moderate impact

35%
Negligible or no impact

20% Impact not assessed as yet

20%

Inference:
o As per the above Figure 17 , 25% of the respondents think that
there will be a substantial impact on their company on account
of increase in rate of tax on services, 20% think that there will
be a moderate impact and 20% think that there will be no
impact at all.
o 35% of the respondent has not assessed yet.
R. Responses regarding whether the introduction of GST will result in
better input tax credit on their company

Table 18
Response categories No of respondents Relative frequency

Yes 16 0.8

No 04 0.2

Figure18

Responses regarding whether introduction of

GST will result in better input tax credit of
company

20%
Yes No

80%

Inference:

As per the Figure 18, 80% of the respondents think that introduction of GST
will result in better input tax credit for their company and 20% think that it
will no result in better input tax credit resulting in lesser profitability.
 4.
FINDINGS &
CONCLUSIONS
FINDINGS :

o Earlier Air India was paying VAT to the caterers which they
were not claiming under CENVAT. Due to not claiming of
input vat, Price of the ticket is inclusive of double taxation
(cascading effect) i.e. SERVICE TAX ON VAT. So as of now
they can claim that VAT under GST model.

o As per the analysis:

 Air fares of economy class has decreased

 GST has no impact on operations of ATF fuel of air india.

 Leasing cost and repairs and maintenance cost has decreased

 Compliance cost has increased

Ultimately we can see GST has an overall positive impact on operations of

GST.

o Employees of airindia were not aware of the GST impact

o Employees of air India believe that GST does not only impact
product pricing and IT system but has an impact on other things
like reconciliation between earlier and current tax.
CONCLUSIONS:

After analyzing the old tax regime, and comparing it with the current Goods
and Services Tax structure, it is safe to say that India is in dire need of such a
tax reform. From Aviation Industry’s point of view high taxes have
obstructed their growth for long, and stopping it from realizing the potential
it is supposed to live up to.
GST which has been adopted by almost 146 countries now, paves its way in
India, and the timing could not be better, with significant reforms announced
by the government. This could be India’s chance to shine, and lead to better
collection of taxes, and hence reduce the fiscal deficit of Government.
Even today due to lack of clear separation between goods and services,
amount of TAX payable cannot be ascertained properly. This problem will be
rectified by GST where the distinction between Goods and services will be
removed for purpose of tax collection and a uniform rate will be applied.

Hence, Goods and services Tax, though requires a detailed study about its
structure, once applied could change the future of India, and the Indian
Aviation Industry could finally reach to great heights without this
obstruction of poor Tax structure.
  Limitations and Recommendations
Limitations:

o The study could have been more comprehensive and

more representative as it could have the sample-size
been larger, but it was not possible mainly due to lack
of time and some other constraints.

o The areas covered were restricted to Northern

region in AIR INDIA of Delhi only.

o All this report has been an individual attempt and

also it involves the human process of interpretation
and analysis, so there are chances of human error.

Recommendations:

o Earlier we observed that there was inadequate

input tax credit but after implementation of GST
proper tax credit should be considered as per GST
committee recommendations.

o AIR INDIA should deposit all the outstanding

debts liabilities so that there should not be any
interest and penalty burden on the huge loss
running airlines.

o As far as the IT system adopted by air India i.e.

SAPS which is already the advanced operations
software, there is no further recommendations on
the accounting system and procedure.
  References

[1] PoirsonH.,TheTax System in India: Could Reform Spur Growth?,

International Monetary Fund Working paper, Asia and Pacific Department,
Vol. 06/93, Pg. 1-22,2006

[2] Ahmad E. and Poddar S., GST Reforms and Intergovernmental

Considerations in India, Asia Research Centre, Working Paper 26, Pg. 1-43,
2009

[3] HalakhandiS., Goods and Service Tax – An introductory study, The

Chartered Accountant, Pg. 1595-1601.2007

[4] NCAER, Moving to Goods and Services Tax in India: Impact on India’s
growth and International Trade, Final Report, Pg. 1-78, 2009

[5] EhtishamAhamad and Satya Podda “Goods and Service Tax Reforms and
Intergovernmental Consideration in India”, “Asia Research Center”, LSE,
2009

JOURNAL
[1] Dr. R. Vasanthagopal, “GST in India: A Big Leap in the Indirect Taxation
System”, International Journal of Trade, Economics and Finance, Vol. 2, No.
2, April 2011.

[2] Pinki, Supriya Kamna, Richa Verma, “Good and Service Tax – Panacea
For Indirect Tax System In India”, “Tactful Management Research Journal”,
Vol2, Issue 10, July2014.
  Bibliography
www.gstindia.com/basics-of-gst-implementation-in-india/
wwww.taxguru.in/goods-and-service-tax/goods-service-tax-gst-2.html

www.
airind
ia.in
http://www.cbec.com/
http://airlines.iata.org/
https://www.ibef.org/
  ANNEXURE

QUESTIONNAIRE

1) A. Were you familiar with the working of GST?

a) Yes
b) No
2) B. On a scale of 1 to 10, how would you rate the preparedness of your
organization to handle/face the introduction of GST?
a) ____________________
3) C. Do you think GST is a fair tax system?
a) Yes
b) No
4) D. Do you think GST will be easier to comply with or difficult?
a) Easier
b) Difficult
c) Don’t know
5) E. Is your current software system equipped to handle the current GST?
a) Yes
b) No
c) Not applicable
6) F. How much time it took for you to reconfigure your current IT system?
a) 1-2 months
b) 3-4 months
c) 4-6months
7) Please select the biggest challenge for your company during the transition
to GST regime?
a) Product pricing
b) IT/ System changes
c) Others____________(please specify)
8) Do you think GST is beneficial for Air India?
a) Yes
b) No
c) According to you, will GST have an impact on profits of Air India?
d) Yes
e) No
9) Do you think GST will be a burden to consumers?
a) Yes
b) No
c) May be
10) According to you which taxation system is better?
a) One nation, one tax
b) One nation, multiple tax
11) Do you think implementing GST will cause higher price for goods and
services?
a) Yes
b) No
12) Do you think decrease in price of economy class tickets will boost up the
sales?
a) Yes
b) No
c) To some extent
13) Do you see a rise in the demand for your service by consumers?
a) Yes
b) No
14) Do you believe GST will require revision in prices of your goods or
services?
a) Yes, upward price revision
b) Yes, downward price revision
c) No revision necessary
d) Not assessed yet
15) Have you accessed the impact of GST on working capital requirements?
a) Substantial impact
b) Moderate impact
c) Negligible or no impact
d) Impact not assessed as yet
16) What would the impact on your company on account of increase in rate of
tax on services?
a) Substantial impact
b) Moderate impact
c) Negligible or no impact
d) Impact not assessed as yet
17) Do you believe that introduction of GST will result in better input tax
credit for your company resulting in better profitability?
a) Yes
b) No