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

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