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Tax-free bonds for construction of low-cost airports in small towns, inclusion of aviation turbine fuel (ATF) in declared goods, and an additional fund infusion of Rs 1,600 crore to Air India are some of the proposals of the civil aviation ministry for the Budget.
The ministry had taken inputs from airlines and airports before submitting these demands to the finance department for inclusion in the Budget, a senior official said.
The recommendations also include permission to the Airports Authority of India to raise tax-free bonds for construction of low-cost airports. Also, the ministry has asked for extending the custom duty credit scheme to airports.
Low-cost airports are on the National Democratic Alliance government’s priority list. Airlines have sought removal of high taxes on ATF, which has been causing huge losses to them.
“We have submitted our pre-Budget recommendations. We are suggesting that ATF be notified as a declared good, which will result in imposition of a flat four per cent sales tax. Other suggestions pertain to opening access for transport of ATF and transparency in aviation fuel pricing. We want oil companies to allow airlines to use their infrastructure for transport of ATF,” said the ministry official quoted above.
Private airports have also asked for inclusion in the ‘Served from India Scheme’, which allows companies that earn foreign exchange to avail custom duty credit. Currently, this scheme is applicable to airlines but not airports.
Air India has sought an additional Rs 1,600 crore as its expenses have mounted due to currency rate fluctuation and increase in interest spend. Last year, Air India was promised Rs 6,000 crore but got only Rs 5,500 crore. Air India has demanded the additional fund as it had to borrow funds through bonds to meet funding gap, the official said.
