Service tax on aircraft lease to hit airlines


The proposal in the Union budget to levy service tax on plane rentals is expected to further burden loss-making carriers flying above the debris of failed aviation ventures of the recent past. Leased aircraft, numbering about 350, make up most of the airline fleets in India.

The country’s six biggest airlines—Air India Ltd, Jet Airways (India) Ltd, SpiceJet Ltd, IndiGo, Air Costa and GoAir—together pay about Rs.1,500 crore annually in aircraft lease rentals. Service tax of 12.36% on this amount means an annual outgo of Rs.185 crore. The tax will be applicable from 1 October. Heavy losses grounded billionaire Vijay Mallya’s Kingfisher Airlines Ltd in 2012. It was preceded by the fall of Paramount Airways, Air Deccan (merged into Kingfisher), MDLR Airlines, Indus Airways and Deccan 360. Airline consultancy Capa Centre for Aviation does not rule out another airline going bust this fiscal year.

Read more at Mint  


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