Aviation ministry to take up service tax issue
March 15th, 2011 - 6:51 pm ICT by IANS
New Delhi, March 15 (IANS) The civil aviation ministry will raise the issue of the proposed increase in service tax on air travel with the union finance ministry, a senior official said Tuesday.
“We have received a presentation from the Federation of Indian Airlines (FIA) on the service tax issue, and we are in touch with the finance ministry, and will raise the issue with them,” Civil Aviation Secretary Nasim Zaidi said at the India Aviation Meet organised by Confederation of Indian Industry (CII) here.
According to him, the FIA in its presentation given earlier to Civil Aviation Minister Vayalar Ravi opposed the imposition of the 10 percent service tax in business class on domestic flights and 10 percent in business and first classes on international flights.
Kingfisher Airlines Chairman Vijay Mallya told reporters that the levy increase would be passed on to the consumer and that the government should reconsider its decision.
“If we look at the past, there have been instances where the government had rolled back the proposals on increase of the tax,” Mallya said.
Finance Minister Pranab Mukherjee in his union budget for 2011-12 had proposed to increase service tax on air travel “by Rs.50 in the case of domestic air travel and Rs.250 on international journeys by economy class”.
In July last year, the ministry had put a cap on service tax in case of domestic flights at 10 percent of the total value of the ticket or Rs.100 per travel, whichever was less, and 10 percent of the gross value of the ticket or Rs.500 on international travel by economy class.
Zaidi further said that the ministry was considering a proposal by the department of industrial policy and promotion (DIPP) to allow foreign airlines to invest in the country, the decision on which is expected shortly.
With regard to development of new airports in Tier-II and III cities, Zaidi said a public private partnership (PPP) concession agreement model was under consideration and that 35 airports are planned to be developed under this framework.
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Tags: civil aviation ministry, concession agreement, confederation of indian industry, dipp, domestic air travel, domestic flights, economy class, foreign airlines, gross value, india aviation, indian airlines, international flights, international journeys, pranab mukherjee, public private partnership, rs 250, union budget, union finance ministry, vayalar ravi, vijay mallya