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