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Wednesday, Mar 13, 2002

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Tax incentives at greenfield airports likely

Ashwini Phadnis

NEW DELHI, March 12

THE Government may consider exempting the levy of Inland Air Travel Tax (IATT) and Foreign Travel Tax (FTT) for passengers departing from new greenfield international airports for a pre-determined period of time to make the projects more viable.

The draft policy framework for greenfield airports states that the Centre may consider such a proposal only if there is a request from the concerned State Government.

The draft policy adds that the IATT and FTT exemption would apply only from the date that the new airport actually starts operating, and would enable the airport operator to levy an equivalent amount as additional user development fee (UDF) for a fixed period.

This is among a host of possibilities, which are being examined in the draft policy. Besides, the Government is also likely to consider favourably any proposal for issue of long-term tax free bonds by the promoters of such projects.

The draft policy also states that the passenger service fees (PSF) levied at all airports would be applicable to the green field airports also. Further, the draft policy adds that the PSF being levied through passenger tickets will have two components - security charges and levy of airport maintenance and upkeep.

The PSF collected through airline passenger tickets will be passed on to the greenfield operators through a mutually decided mechanism.

Further in keeping with the proposals in the draft civil aviation policy, the draft policy states that the airport operator would be allowed to optimise use of and revenue from real estate subject to the land, rules and regulations of the State Government.

To offset the possible losses from the airport with commercial revenues from other sources the draft policy lists several options including having an export processing zone, industrial areas, commercial and shopping areas and golf courses, among others.

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