New Delhi: Civil Aviation Minister Praful Patel on Wednesday asked the Finance Ministry to rationalize the tax structure in the aviation industry including levies on aviation turbine fuel (ATF) in the Budget for 2008-09.
In a pre-Budget meeting with Finance Minister P Chidambaram here, Patel also sought extension of tax rebate given to the newly-merged Air India to help it in its consolidation process.
The Civil Aviation Minister also sought withdrawal of service tax on First Class and Business Class air tickets saying this was putting domestic airlines in a disadvantageous position vis-a-vis foreign airlines on whom this tax was not applicable.
“I feel that the impact of ATF price hike is something which needs to be addressed by the government. This, coupled with higher taxes at the central and the state levels, is having serious impacts on the viability and the financial health of the aviation sector,” Patel told reporters after the meeting with the Finance Minister.
Pointing out that civil aviation is a sunrise sector, he said it needs a little bit of facilitation and support.
Patel quoted Finance Minister as saying that the government will have to understand the problems faced by the civil aviation industry due to the high prices of ATF.
However, Chidambaram did not commit anything.
Patel quoted Finance Minister as saying that he cannot give any categorical commitment at the moment.
According to Patel, the Finance Minister asked him to impress upon states for rationalisation of state taxes on jet fuel and improvement in infrastructure facilities at the proposed meeting of the Centre and state chief ministers on 18 January.