Rationalise aviation tax: Patel to FM

The Union Minister for Civil Aviation, Praful Patel, requested finance minister P Chidambaram to rationalise aviation tax structure, decrease sales tax levied on aviation turbine fuel (ATF) and do away with service tax on business and first-class tickets for Indian international carriers.

In a pre-Budget meeting with the finance minister, Patel also sought the extension of the tax rebate given to national carrier Air India to help its consolidation process.

ATF accounts for 45 per cent of an airline's operating cost and the sales tax levied on it by the state governments ranges up to 35 per cent in some cases.

In another meeting with Defence Minister AK Antony minor defence issues relating to the Nagpur airport were cleared.

"The stage is set for Cabinet approval for the Nagpur airport which will be given tomorrow," said a ministry official.

Three weeks back, the Federation of Indian Airlines (FIA) had met the Revenue Secretary, PV Bhide, with a wishlist for the Budget 2008-09.

The federation had also asked for private airlines to be brought on the same platform as the public sector carriers in terms of setting off previous losses against future profits in case of amalgamation or merger.

The change would greatly benefit recently merged carriers Kingfisher and Deccan which had incurred huge losses last year. Also, the federation reiterated last year's demand of doing away with fringe benefit tax, which is levied on crew or passenger accommodation in case of delays, food catering services etc.

Patel is going to meet officials from the state governments on January 18 on various issues regarding the aviation sector. The issues will include reducing of sales tax for ATF apart from asking for larger participation of the states for infrastructure development across the country.