The government today said it 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)," Central Board of Excise and Customs (CBEC) chairman V Sridhar said at a post-Budget seminar organised by industry chamber Assocham.
Finance Minister Pranab Mukherjee in his Budget had proposed a service tax of 10 per cent on both domestic and international travel.
"The service tax is charged at a flat rate of 10 per cent...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 later told reporters when asked about the fallout of the tax on air travel cost.
He further clarified that service tax would be levied on base fare.
Earlier, while reacting to the budget proposal, aviation industry said the 10 per cent service tax was quite steep and urged the government to see whether it could be rolled back.
