Ad Here  
Airlines hit by service tax on lease While MoTown is on a tailspin, the telecom sector is staging a rally How important is Modi’s German visit... Hyundai Grand i10 awaiting launch Aircraft lessors to get protection from defaulting airlines Hunt for new finance secretary on... Jet-Etihad Rs 2000 plus crore deal to be cleared Lanco to sell Australian acquisition Kolkata kisses goodbye to Ambi? Urja Sangam in Delhi LANCO opens negotiations with buyers for Karnataka power plant Latin America beckons India for investments Trends point to a hung assembly Capital Notes Vodafone to buy out minority shareholders Plans to double trade with Latin America Singapore Airlines prefers Airbus Carlyle invests in Trehan’s Medanta Medical Centre Renault revving up small car launch German envoy Steiner caps a language row GMR to raise US $ 250 mn thru QIP Smartphone prices may change Flipkart India in the red by Rs 280 crore Canada screams over IT outsourcing to India TVS bullish on the two wheeler market? SpiceJet in the news again Vodafone slapped with tax notice of Rs 3700 crore Excise duty may halt the war in SUV market TCS, India’s biggest block buster Infosys not to cut prices Automobile sector in slump... Wal-Mart studying FDI norms post split with Bharti Fox Star Studios to tie-up with Bolly-wood and Kollywood ONGC to draw down on reserves to meet CAPEX needs
Airlines hit by service tax on lease

The civil aviation sector is in for tough times as loss making airlines are likely to be hit further by a 2014-15 Union budget proposal to levy service tax on plane leasing and rentals by the airlines. Indian skies see operation of about 350 leased out aircraft by different airlines.

Six of the leading airlines in the country led by state-owned Air India and private carriers Jet Airways, Spice Jet, Indigo  and GoAir  pay cumulatively over Rs 1500 crore every year for leasing aircraft from other sources. A service tax of over 12 per cent means an additional burden of nearly Rs 190 crore. The new tax is effective from October 1 this year.

The only relief that the budget has provided is that aircraft engines and parts thereof are eligible for duty exemption when imported for servicing, repair or maintenance of aircraft used for scheduled operations.

Civil Aviation industry sources estimated that the cumulative losses of the airlines industry in India was about US $ 1.77 billion ( over Rs 10,000 crore) in the financial year 2013-14. In fiscal 2014-15 the loss is expected to come down marginally to US $ 1.4 billion.

Industry estimates it will not be a surprise if one or two more private airlines folds up like Kingfisher.

Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236