SpiceJet yet to pay Rs 350 crore in TDS, PF of employees

The turbulence for SpiceJet seems far from over as the airline has revealed it has yet to pay Rs 355 crore in Tax Deducted at Source (TDS) and provident fund (PF) contributions owed to employees.
SpiceJet has not paid Rs 220 crore in TDS deductions from employees’ salaries between April 2020 and August 2023 to tax authorities. Additionally, the airline owes Rs 135.3 crore in PF contributions for the same period.
In a preliminary placement document (PPD) filed with the Bombay Stock Exchange (BSE), SpiceJet mentioned that Rs 72 crore of TDS for the assessment years 2009-10 to 2013-14 is disputed.
The company also mentioned disputes over customs, service tax, and goods and services tax (GST). In an attempt to stabilise, SpiceJet plans to raise Rs 3,000 crore through a Qualified Institutional Placement (QIP), selling shares to institutional investors. While Yes Bank has approved the QIP, the airline awaits approval from ICICI and Indian Bank.
The funds will primarily be used to pay off Rs 601.5 crore in overdue taxes and contributions, including TDS, PF, and GST. An additional Rs 750 crore will be used to clear debts with creditors, including aircraft lessors, engine suppliers, and financiers.
The airline is also facing over 25 pending lawsuits, excluding those involving its promoter. Significant defaults under aircraft lease agreements have grounded more than half its fleet, and legal actions by lessors and other vendors are ongoing.
“We have been in alleged default under several of our aircraft lease agreements, leading to the grounding of a large part of our fleet. This has triggered legal or enforcement proceedings, including actions under the Insolvency and Bankruptcy Code, 2016, from aircraft lessors and other vendors,” said the filing.
The airline aims to use a large part of the money raised from the QIP to get its grounded planes back in service. SpiceJet believes that to become profitable in the future, it needs to expand its fleet, increase passenger traffic, and improve earnings.
As of June 30, 2024, 36 of SpiceJet’s 64 aircraft were grounded due to financial difficulties and maintenance issues. SpiceJet has also faced multiple fines from the Securities and Exchange Board of India (SEBI) for non-compliance, with at least 20 instances reported in the past three years.
The airline had been aggressively expanding before the pandemic, particularly after the collapse of Jet Airways, which initially gave SpiceJet growth opportunities.
However, the global halt in travel during 2020, extended restrictions into 2022, rising aviation fuel prices, and the global grounding of Boeing 737 Max aircraft in 2019 all created significant challenges for the airline.
While competitors like IndiGo, with a stronger financial base, managed to recover from the disruptions caused by COVID-19, SpiceJet has struggled. Its market share has dropped below 4%, with fewer than 20 planes currently in operation. Most of its fleet remains grounded due to financial stress and a shortage of spare parts and engines.