The Hindu : National : `Re-look' at tax on leased aircraft

Online edition of India's National Newspaper
Wednesday, Jul 28, 2004

National

National

`Re-look' at tax on leased aircraft

By Our Special Correspondent

NEW DELHI, JULY 27. The Government will take a "relook'' at the demand for reconsidering the withholding tax on leased aircraft. After a meeting with the Union Finance Minister, P. Chidambaram, here today, the Minister of State for Civil Aviation, Praful Patel told newspersons that "the Finance Minister has agreed in principle for equity infusion into Indian Airlines and Air India.''

Mr. Patel said he wanted equity in Air-India to be raised as a part of efforts to expand the fleet of the two airlines since the low equity base was coming in the way of acquiring more aircraft.

"The final arrangement of equity infusion has to be worked out,'' he said. Both airlines would continue to lease ultra-long-range and medium capacity long-range aircraft.

On the withholding tax on the leasing of aircraft at the rate of 48 per cent, introduced in the Budget this year, Mr. Patel said he raised the issue and Mr. Chidambaram promised to "look into'' it.

The proposed tax would hit most of the airlines except Jet Airways which had acquired its own aircraft.

Infrastructure fund

Mr. Patel also requested Mr. Chidambaram for some share from the Rs. 40,000 crore-infrastructure fund, announced in the budget, for the development of about 20 small airports.

The issue of differential pricing of aviation turbine fuel, owing to different rates of sales tax in various States, would be sorted out with the introduction of Value Added Tax next year.

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