IndiGo faces Rs 58.75 crore GST penalty for FY21, calls order erroneous, to challenge tax order

IndiGo on Friday disclosed that it has received a tax penalty notice of ₹58.75 crore from the Additional Commissioner of CGST, Delhi South Commissionerate, relating to the financial year 2020–21. The order includes a GST demand along with penalties, but the airline said it will challenge the notice before the appropriate appellate authority.

In a filing to the BSE, IndiGo termed the tax order “erroneous”, asserting that it has a strong case on merits, supported by external tax advisors. The carrier emphasised that the development is not expected to materially impact its financial position, day-to-day operations, or broader business activities. IndiGo has faced similar scrutiny in the past, but the latest penalty comes at a particularly delicate moment for India’s largest airline.

The GST demand coincides with a period of heightened operational and financial pressure, following severe flight disruptions in the first week of December. In response to the crisis, the DGCA has ordered IndiGo to cut 10% of its domestic winter 2025 schedule across all sectors. Further, IndiGo CEO Pieter Elbers has been summoned to appear before a DGCA Committee of Officers on December 12 as the regulator examines the root causes of the disruptions.

Global brokerage Jefferies has trimmed its target price for InterGlobe Aviation, the parent of IndiGo, to Rs 6,035 while maintaining a ‘Buy’ rating. The firm said recent operational turmoil and rising costs are likely to pressure near-term earnings, but IndiGo’s strong market leadership and ongoing international expansion continue to support a positive long-term outlook. As of 1:30 pm on Friday, the stock was trading 0.58% higher at Rs 4,846.50.

Earlier on Friday, the DGCA also suspended four Flight Operations Inspectors (FOIs)—officials responsible for airline safety oversight, pilot training checks, and compliance monitoring. The regulator simultaneously set up a four-member high-level panel comprising Joint Director General Sanjay Brahamane, Deputy Director General Amit Gupta, senior FOI Kapil Manglik, and FOI Lokesh Rampal. Their mandate is to investigate operational lapses at IndiGo and recommend corrective actions.

The airline’s ongoing crisis has led to mass cancellations and widespread delays. With a dominant 60% share of India’s domestic aviation market, IndiGo’s turmoil has had cascading effects across the sector. In the past 10 days alone, it has cancelled over 1,000 flights, stranding passengers nationwide. On Friday, more than 50 flights from Bengaluru Airport were scrapped as the disruptions deepened.

The chaos stems largely from the implementation of revised Flight Duty Time Limitation (FDTL) rules, effective November 1. The rules mandate increased rest periods, restrict night operations, and enforce a 48-hour weekly rest cycle—measures intended to address pilot fatigue but which have tightened crew availability.

Civil Aviation Minister Ram Mohan Naidu, addressing Parliament, noted that the FDTL norms were introduced after stakeholder consultation. He warned that no airline, regardless of size, would be permitted to inconvenience passengers, adding that strict action against IndiGo is on the table as investigations progress.

At Agenda Aaj Tak, Naidu noted that for the first time, the government stepped in to cap airfares through price slabs to prevent excessive ticket spikes. Naidu also outlined his broader vision for a more competitive sector, saying, “We need five airlines with at least 100 aircraft each to avoid a one-airline market.” He criticised IndiGo for being inadequately prepared for the new FDTL norms and for failing to alert passengers about cancellations promptly.