New Delhi / Hyderabad: Civil aviation minister Praful Patel on Wednesday sought complete rollback of 10% service tax imposed on domestic air travel, while the CBEC said that the rate should not be too heavy on airlines.
“We will request for a complete rollback of service tax,” Patel said in Hyderabad.
“The civil aviation ministry would take up the issue with the finance ministry,” Patel said, expressing the hope that the latter would respond favourably to the civil aviation ministry’s representation.
The chairman of Central Board of Excise and Customs (CBEC), V. Sridhar, at a post-budget seminar in New Delhi said that the government could consider a lower service tax rate on international and domestic air travel and is in talks with the airlines on the issue.
“We are having a dialogue (on service tax issue) with all the carriers and other stakeholders, we should arrive at a rate which is not too excessive and should not pass undue burden (on passenger),” Sridhar said.
Finance minister Pranab Mukherjee in his budget had proposed a service tax of 10% on both domestic and international travel.
“The service tax is charged at a flat rate of 10%, whether that is too heavy and whether we need to peg the rate at some different level (is to be considered),” CBEC member Y.G. Parande said in New Delhi when asked about the fallout of the tax on air travel cost.
Parande further clarified that service tax would be levied on base fare.
Mukherjee, while trying to garner more revenue from service tax, also expanded the scope of ‘airport services´ tax by including facilities provided within the airport premises.
On national air-carrier Air India’s financial health, Patel said that the airline needed to tighten up its belt.
“The airline was also planning to return some of its leased aircraft,” he said adding: “Air India plans to return 22 leased aircraft starting this month and extending over the next couple of months.”