The Hindu Business Line : IATA agents seek regulatory board for airline pricing, taxation

Kochi, Oct. 31 The IATA Agents Association of India has requested the ministries of Finance, Civil Aviation and DGCA to intervene in the airline pricing and taxation policies by forming an airline pricing and taxation regulatory board to regularise, scrutinise and monitor the air fares, taxes, surcharges, commissions and incentives applicable in India.

In a memorandum submitted to the Prime Minister, the President of the Association, Mr Biji Eapen, urged the Government to sign and implement the IATA Resolutions 001 on permanent effectiveness and 200 G on filing of Government requirements and authorisations to enforce the rule that all airlines operating in India should declare and file their airfares, taxes, surcharges, commissions, discounts and incentives with the Government and enable DGCA to monitor and control the same.

Taxing issues

He pointed out that the service tax is presently imposed only on tickets issued by travel agents, whereas neither service tax nor income-tax is applicable on tickets issued by airline offices directly or through e-ticketing on Internet.

The service tax should be made applicable to all tickets issued in India through agents or directly by airlines, as presently agents are getting commission and airlines are swallowing the entire commission together with the service and income-taxes that would also have been applicable on such tickets issued directly by them.

Since airlines do not merge fuel surcharge with the base fares, the association decided to charge the airlines a collection fee of nine per cent on the fuel surcharges collected.

The Government will benefit by way of tax revenue on such fees, he said, adding that higher commissions earned by the agents would be made taxable.

Ensure transparency

The Association pointed out that a foreign airline is doing a better job than the national carrier in India.

The obvious reason is that the fuel surcharge is merged with the base fare.

The Government, therefore, should make it legally binding on airlines to disclose the complete fare and tax structures, including the rates of commission. The European Commission has already announced its goal to ensure more transparency in airline fares and taxes, he added.

The association noted that earlier travel agents were being paid commission at a rate of 11 per cent. Over the years, this was reduced to 9, 7, and then 5 per cent with an attempt now to reduce it to ‘zero’ commission. However, abolishing the agency commission will result in a total loss of revenue, as almost 85 per cent of travel agents will be forced to pull down their shutters.

Quoting figures, the association pointed out that Rs 26,000 crore worth of international tickets were issued by IATA Travel Agents during the last fiscal, which earned the Government 12.36 per cent as service tax and 11.33 per cent as income tax on the commissions earned.

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