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India’s aviation sector expects the finance minister to announce a series of measures, including tax sops, in the upcoming budget to help the industry tide over the crisis as the covid pandemic has accentuated its financial woes.

The government must consider bringing aviation turbine fuel under the goods and services tax (GST) regime, besides reducing airport charges, overflight fees, and excise duty on fuel, as well as extending lower rate for withholding taxes, to help the aviation sector bounce back, experts told Mint.

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“This budget should focus on extension of lower rate on withholding taxes, which was decreased to 25% of the standard rate. This should be extended for another year till the market has fully recovered as it will help increase liquidity. Another area of focus should be the lowering of the income tax rate for travel companies," Kanika Tekriwal, chief executive and founder of JetSetGo Aviation, a New Delhi-based private jet operator, said.

“GST on the travel industry should be restricted to 5%, be it travel by private charter or commercial flights, to decrease the costs of travelling for people who don’t get GST benefits. It will be a boost for the economy," she said.

Indian airlines are expected to post a net loss of 21,000 crore this fiscal year, following travel restrictions and diminishing travel appetite amid the covid crisis, and will require additional funding of 37,000 crore from FY21 to FY23 to recover from the losses and debt, credit rating agency ICRA Ltd said in a December report.

The debt is expected to rise to about 50,000 crore, excluding lease liabilities by FY22, ICRA said in the report.

“Sops rolled out by the government last year during the peak of the pandemic will help the sector in the long run but we are in need of urgent short-term measures, which could help aviation bounce back. Several proposals by the industry, such as easing requirements for airlines to operate flights on remote and loss-making routes, and a free hand in ticket pricing, which were earlier rejected, should be considered," a senior airline official said seeking anonymity. “The government should also take pertinent policy decisions such as bringing jet fuel under GST, which will help bring down costs immediately," he said.

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