The Hindu Business Line : Minister urges level playing field for pvt airline mergers

New Delhi, Jan. 16 The Civil Aviation Minister, Mr Praful Patel, on Wednesday pitched for a level playing field for private airlines on the issue of allowing them to carry forward accumulated losses and unabsorbed depreciation in the event of their merger with another private airline.

The current Income-Tax regime allows only public sector airlines the benefit of carrying forward accumulated losses and unabsorbed depreciation in respect of M&A deals done by them. With consolidation underway in the domestic aviation industry, private sector airline operators are keen that they too be given the tax benefit for their M&A deals.

This issue was raised at a meeting that Mr Patel had with Finance Minister, Mr P. Chidambaram, here on Wednesday. The issue of rationalising taxes and duties on aviation turbine fuel (ATF) and providing declared good status to ATF was also discussed. Fuel alone accounts for more than 40 per cent of the total operating costs for domestic airlines as there is a wide variation in the price that international and domestic airlines pay for ATF. The price of fuel for domestic operations includes customs duty of 10 per cent, excise duty of 8 per cent and sales tax averages 23 per cent across the country.

“The high domestic price of ATF is contributing to the losses being incurred by the industry. The need for doing something so as to bring down the financial burden on the airline was emphasised at the meeting,” officials said. A plea was also made to review the service tax levied on international air travel from the country in first and business class.

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Minister urges level playing field for pvt airline mergers