Rationalisation of taxes is likely to have a multiplier effect and stimulate growth in the aviation sector. High taxation, particularly indirect taxation, in a sector which does not have 21 per cent margins, is resulting in it being “chronically ill”, low-cost carrier IndiGo Airlines, said on Wednesday.

The airlines’ top management is expecting the upcoming Budget to take “some immediate action” on long standing problems of taxation; bringing ATF under the GST ambit, elimination of customs duties on repair parts, among others.

According to Ronojoy Dutta, CEO, IndiGo Airlines, civil aviation pays 21 per cent of its revenues to the government as indirect taxes with very little input credit. It is an unreasonable proposition to expect that the industry should earn a 21 per cent margin just to pay taxes to the Government. This proposition is resulting in an industry that is “chronically ill” and is unable to live up to its true potential of boosting commerce and employment.

“We would request the Ministry of Finance to take some immediate action to address this long festering problem. Central excise taxes on fuel should be reduced from 11 per cent to 5 per cent, ATF should be brought under the GST, custom duties on repair parts should be eliminated,” he said.

A rationalisation of taxes will result in explosive growth for aviation, which will have multiplier effects throughout the economy, stimulating commerce and employment, he added.

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