The Budget proposal to charge 10 per cent service tax on air travel may not be rolled back, as the government expects to raise between Rs 600 and Rs 1,000 crore annually through the measure.
Maintaining that the government plans to explore new avenues to mop up resources, a top official said, "at the moment it seems highly unlikely that there will be any roll-back on the service tax issue".
The aviation industry has sought a reversal of the proposal to bring all classes of air travel in both domestic and international sectors industry under the service tax net, saying it would act as a "dampener" for the industry which is yet to come out of the red.
The International Air Transport Association (IATA), representing all major carriers across the world, had also shot off a letter to Finance Minister Pranab Mukherjee requesting withdrawal of the proposal.
Requesting anonymity, the official said the Finance Ministry is unlikely to accede to the industry request for a relook at the proposal.
Civil Aviation Minister Praful Patel recently had a meeting with the Finance Minister, where the issue was among others which are understood to have cropped up.
The implementation of the proposal would force the airlines to pass on the service tax burden on to the passengers, thereby increasing the airfares.