IndiGo Hit with ₹117 Crore Tax Penalty: Airline to Challenge Input Tax Credit Ruling
CGST Kochi Commissionerate denies ITC claims for 2018–22, imposes heavy fine
IndiGo says order is flawed, vows to contest before higher authorities
By Our Legal Correspondent
New Delhi: December 04, 2025:
India’s largest airline, IndiGo (InterGlobe Aviation Ltd.), has been slapped with a ₹117.52 crore penalty by the Central Goods and Services Tax (CGST) Kochi Commissionerate. The penalty relates to alleged wrongful claims of Input Tax Credit (ITC) during the financial years 2018–19 to 2021–22.
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The airline, however, has strongly denied wrongdoing, stating in a regulatory filing that the order is “erroneous” and that it has a strong case backed by external tax advisors. IndiGo has confirmed it will contest the ruling before the appropriate appellate authority.
What is Input Tax Credit (ITC)?
- ITC is a mechanism under GST law that allows businesses to reduce the tax they pay on outputs by claiming credit for taxes already paid on inputs.
- For airlines, ITC typically applies to services like fuel, maintenance, and operational expenses.
- Disputes often arise when tax authorities believe ITC has been wrongly claimed or applied to exempted services.
Details of the Penalty
- Authority: Joint Commissioner of Central Tax and Central Excise, CGST Kochi Commissionerate.
- Period: 2018–19 to 2021–22.
- Amount: ₹117.52 crore (including demand order and penalty).
- Reason: Denial of ITC availed by IndiGo, leading to the penalty order.
- Airline’s stance: IndiGo insists the order is flawed and will not materially impact its financials.
IndiGo’s Response
In its official statement, IndiGo said:
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- The order is erroneous and not in line with GST provisions.
- The airline has strong legal grounds to contest the penalty.
- External tax advisors have backed IndiGo’s position.
- The penalty will not significantly affect operations or financial stability.
Impact on IndiGo
- Stock market reaction: IndiGo’s shares dipped after the penalty notice, reflecting investor concerns.
- Financials: The airline clarified that the penalty will not materially affect its balance sheet.
- Reputation: As India’s largest airline, such disputes can affect public perception, though IndiGo remains confident of overturning the ruling.
Broader Context: ITC Disputes in India
IndiGo’s case is not unique. Several companies across industries face ITC-related disputes:
- Complex GST rules: Businesses often struggle with compliance due to overlapping provisions.
- Frequent litigation: ITC disputes are among the most common cases in GST tribunals.
- Aviation sector challenges: Airlines face unique issues since aviation turbine fuel (ATF) is outside GST, complicating ITC claims.
Expert Opinions
Tax experts note:
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- The case highlights the need for clarity in GST rules for aviation and service industries.
- Courts have often sided with businesses when ITC denial lacked strong legal basis.
- IndiGo’s challenge could set a precedent for other companies facing similar disputes.
Conclusion
The ₹117 crore penalty on indigo underscores the ongoing challenges businesses face under India’s GST regime. While tax authorities argue that ITC was wrongly claimed, IndiGo maintains it has complied with the law and will fight the order.
This case will be closely watched, as its outcome could influence future disputes in the aviation sector and beyond. For now, IndiGo remains firm that the penalty is unjustified and will not derail its operations.
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