India Corporate Jets Face Tax Evasion Probe

by  Neelam Mathews

January 10, 2012, 3:35 PM

 

India’s Directorate of Revenue Intelligence is scrutinizing eight Indian companies that it believes are basing their foreign-registered corporate aircraft overseas to evade customs duty and taxes. The agency is said to be looking at the status of a Boeing 727 owned by the UB Group, Punj Lloyd’s Gulfstream, Essar’s Boeing 737 and Bharat Hotel’s Embraer Legacy 600. Several other Indian companies’ business jets are also understood to be on the agency’s radar.

India does not levy a customs duty on foreign-registered aircraft if they fly out within 15 days of arrival into the country. Many Indian companies with subsidiaries in foreign countries having the same chairmen choose to keep the U.S. registration as India has complex bureaucratic processes. For example, India’s Directorate General of Civil Aviation (DGCA) does not allow cross-utilization of pilots from one aircraft to another and should a pilot fall sick, it is easier to replace him or her if the aircraft is registered overseas. Clearances for getting heavy maintenance and for pilot training from DGCA can also prove to be impediments. In addition, there is a general belief among private and corporate owners in India that foreign-owned aircraft retain a higher resale value.