Travel Agents Association of India today urged the government to rollback the proposed hike in service tax to 14% on air tickets announced in this year's budget.

The association has also appealed the government to look into the issue of weekly settlement, which it feel will have a negative impact on the industry. "Earlier, there was a cap of 12% service tax on tickets.

But the budget has removed that cap and also has raised it to 14% on the ticket amount. We want a roll back of the service tax on ticketing as this will negatively affect the travel industry," Travel Agents Associations of India (TAAI) President Iqbal Mulla told reporters here.

TAAI and Travel Agents Federations of India (TAFI) are jointly submitting a representation in this regard to the Tourism Ministry and the Finance Ministry next week, he said. "According to our calculations, the economy class tickets will become costlier by up to Rs 5,000, whereas for the business class passenger, flying will be cheaper," he said.

Talking on the issue of weekly settlement, Mulla said, "We have requested Air India to hold discussion on the issue that will be mutually beneficial and we have also written to the Civil Aviation Ministry in this regard." Under the weekly settlement provision of IATA (International Air Transport Association), airlines have to settle their bills within a week against a fortnight period as prevalent in India.

Earlier, airlines like Air India, Jet Airways and Kingfisher Airlines , which are having financial issues, had represented Passenger Agency Conference in Singapore in October last to rollback the 'weekly settlement' plan, which is set to be implemented from June 1, 2012.