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DGCA proposed to ban the use of NSOP license by companies for importing aircraft at low duties

DGCA has proposed to ban the use of Non-Scheduled Operator’s License by companies for import of an aircraft at lower tax rates.

India allows import of aircraft by companies having an NSOP license for commercial use at a concessional tax rate of 3 to 4%. On the other hand, aircrafts imported for personal use are taxed at a higher rate of 19 to 20%.

Normally, what large companies do is that they float a special purpose vehicle as their subsidiary for the aviation business, which gets an NSOP license from the government and imports aircrafts at lower tax rates. This subsidiary company then charters the aircrafts to their parent company for official as well as personal use of its executives, foregoing large amounts of taxes.

DGCA is of the opinion that the companies have been using the NSOP license to get lower tax benefits on the import of an aircraft. Their main purpose is to charter the aircraft to their parent company.

The very purpose of the NSOP license is violated if the companies do not fly their aircraft for commercial operations. Hence, DGCA has proposed to bar any subsidiary aviation company from chartering the aircraft to its parent company. It has also proposed that the non-scheduled aviation company has to clock commercial flights in order to keep its NSOP license.

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