Civil Aviation ministry seeks rationalised tax structure from the Budget

New Delhi: Minister for civil aviation, Praful Patel has requested the Finance Ministry to take a more rational view of the tax structure in the aviation industry, including levies on aviation turbine fuel in the annual Budget exercise for 2008-09.

At a pre-budget meeting with finance minister P Chidambaram, the head of the civil aviation ministry also requested for an extension of the tax rebate given to the recently joined Air India (and Indian), which will give it a leg-up in its consolidation process.

Patel also wants the withdrawal of service tax on First Class and Business Class air tickets, on the grounds that this puts domestic airlines at a disadvantage against foreign competition airlines, on whom this tax is not applicable.

Speaking after his pre-budget consultation with the finance minister, Patel said that the impact of the price hike in aviation turbine fuel (ATF) is a key issue that needs to be addressed by the government. He said that this price hike, along with higher taxes at the central and the state levels is negatively impacting the viability and financial health of the aviation sector. Patel said that civil aviation is a sunrise sector, and more than qualifies for some facilitation and support from the government.

Finance minister P Chidambaram is understood not to have made any promises thus far to the civil aviation minister's requests.