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NEW DELHI : The country's largest domestic airline, InterGlobe Aviation Limited-operated IndiGo on Wednesday said that the government needs to reduce indirect taxes on the sector that has resulted in losses and prevented the sector from boosting commerce and employment. 

"Civil aviation provides efficient infrastructure, critical for economic growth and employment in our country. Yet civil aviation pays 21% of its revenues to the government in indirect taxes with very little input credit," IndiGo's chief executive Ronojoy Dutta said in a statement. 

"It is an unreasonable proposition to expect that the industry should earn a 21% margin just to pay taxes to the Government. This unreasonable proposition is resulting in an industry that is chronically ill and is unable to live up to its true potential of boosting commerce and employment," Dutta added.

Mint had on Wednesday reported that the aviation industry is hoping that the government will cut taxes on jet fuel in the forthcoming Union budget to propel a recovery of the sector hit hard by the pandemic.

Among key expectations are a cut in taxes on aviation turbine fuel (ATF), which make up 25%-40% of an airline’s operating cost, and other incentives. 

"We would request the Ministry of Finance to take some immediate action to address this long festering problem. Central excise taxes on fuel should be reduced from 11% to 5%, ATF should be brought under the GST, custom duties on repair parts should be eliminated," Dutta said in the statement. 

"A rationalization of taxes will result in explosive growth for aviation, which will have multiplier effects throughout the economy, stimulating commerce and employment and integrating the different regions of our diverse country closer together," Dutta added. 

Aviation consultancy Capa India has forecast airlines to report losses of $1.5-1.75 billion between October 2021 and March 2022.

As things stand, daily domestic air passenger traffic has declined steadily since the beginning of this month due to surge in cases of the new Omicron variant of coronavirus.

On 18 January, the number of departing domestic passengers stood at 150,052 far below the 367,000 average daily flyers recorded in the week ended 25 December, 2021.

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