IndiGo shares trade lower as airline receives GST penalty notice worth over ₹458 crore; all you need to know

The GST penalty notice worth ₹45,826,169,80 has been issued for financial year 2018-19 (FY19) to FY23.

“The GST department has passed an order imposing GST demand along with interest and penalty on compensation received from a foreign supplier and denial of input tax credit. The company strongly believes that the order passed by the GST department is erroneous and not in accordance with law, backed by advice from external tax advisors,” IndiGo said in a regulatory filing.

It further said that the major airline will contest the order and will take appropriate legal remedies against the aforesaid order. “The company is already in appeal before the Commissioner (Appeals) in a similar matter for FY 2017-18,” is added.

In a separate filing, IndiGo also informed that it has received another GST penalty notice from Lucknow’s Joint Commissioner office worth ₹14,59,527 for financial year 2021-22.

The budget airline, however, said that there is no significant impact on financials, operations or other activities of the company.

According to reports, IndiGo has hiked allowances for pilots by up to ₹2,000 with effect from January 1, weeks after the country’s largest airline faced severe flight disruptions due to pilot rostering challenges.

They also said that the tail-swap allowance was not provided earlier, and the hikes will be effective from January 1. Generally, a tail swap refers to replacing a scheduled aircraft with a different aircraft.

The Gurugram-based carrier, which commands over 65% of India's total domestic traffic, had cancelled over several flights from six metro airports across the country in early December due to an operational crisis.

Aviation safety regulator DGCA had reduced IndiGo's flight schedule by 5%, following large-scale flight disruptions.

IndiGo share price

At 9:50 AM, shares of InterGlobe Aviation were trading at ₹4,995 apiece on the National Stock Exchange, falling 0.46%. The shares had fallen nearly 1% to touch intraday low of ₹4,982 apiece.

The stock has fallen 3% in the last five trading sessions and over 16% over the last six months. On a monthly basis, the stock has tumbled 13.5%. However, on a year-to-date basis, IndiGo shares have gained nearly 9%.

The company’s market capitalisation stands at ₹1.94 lakh crore.