Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT Audit :: VAT RATES :: form 3cd :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: TDS :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: ACCOUNTING STANDARDS
VAT (Value Added Tax) »
 Is it a modified Value Added Tax?
 GST regime: VAT Commissioner and CBEC to work with businesses
 Amendments in the Second Schedule appended to the Act (Delhi Value Added Tax Act, 2004)
 Guidelines relating to downloading of Statutory Forms-Modification thereof
  Grant of Registration under DVAT & CST
 VAT on petroleum products to continue, to be decided by GST Council
 Government rolls out settlement scheme to clear VAT, CST dues
 Maharashtra government offers VAT benefit to realty buyers
 Govt should focus on income tax instead of VAT
 Amendments in the second Schedule received from Finance Deptt.
 VAT exemption stays in tax reform bill

Simplify service tax, VAT to make aviation sector investor-friendly
February, 19th 2013

The Indian aviation industry has evolved steadily from the days of the erstwhile Tata Airlines (then India's national carrier) with single aircraft operations to a phase that has not only been witnessing a multitude of airlines and airports, but also a gamut of service offerings. These integrated services include passenger and freight movements and aviation allied services, including maintenance, repair, ground handling and general aviation.

The entry of low-cost carriers, higher household incomes, strong economic growth, the opening up of the aviation sector to allow foreign airlines to invest in Indian peers, and surging tourist inflows are the major drivers of growth in the sector.

Having said that, rising fuel prices and the global economic uncertainty, coupled with intense competition, are adversely affecting the financial performance of Indian airlines. There are multiple and cascading incidence of taxes throughout the sector. It appears that the sector is seen as a revenue source rather than a revenue and employment generator for the economy. Although the government has allowed airlines to import fuel, the sector is grappling with high service tax on air travel, airport charges, fuel surcharge, etc..

Generally, aircraft lease arrangements are entered on a net of tax basis (i.e. Indian income tax is borne by the lessee). This increases the cost in the hands of Indian airlines which have to bear the additional tax cost on aircraft lease. Till a few years back, withholding tax on aircraft lease rentals was exempt subject to approval from the central government. This exemption should be restored to ease the tax burden on Indian airlines.

The maintenance, repair and overhaul (MRO) sector is affected by the tax differential in domestic and foreign MROs, which is rendering the sector unattractive. The government needs to rationalize the customs duty on the import of spare parts and simplify the service tax and the value added tax (VAT) regime to ensure a more investor-friendly tax environment.

According to the International Air Transport Association (IATA), fuel accounts for about 45 per cent (as published in business daily on February 14, 2012) of Indian airlines' cost base. There is an urgent need to rationalize VAT on the aviation turbine fuel (ATF) which ranges from 4 per cent to 30 per cent across India. It is a long-standing demand of the industry that ATF be classified under the 'Declared Goods' category with a uniform VAT rate of 4 per cent.

The government has revised the service tax on air tickets and removed the upper limit on taxes. Accordingly, all international and domestic air tickets are subject to 4.95 per cent service tax on the gross fare. This has brought about an upswing in prices, negatively impacting general consumers, making a case for a reduction in the service tax on all classes of air travel.

In the last Budget, overseas borrowing for working capital requirements of airlines was permitted for one year subject to an overall ceiling of $1 billion. This should continue to bring in a long-term respite for bleeding airlines. Further, the government could consider allowing private airport operators to issue long-term infrastructure bonds to raise funds from the market.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multimedia Presentations Multimedia Solutions 3D Solutions Corporate Presentations Business Presentations Multimedia Presentation India M

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions