Service Tax on Air Tickets Illegal - IATA Chief
Legal Corner Icon — the image was hosted by the publisher and was not captured.THE International Air Transport Association (IATA) Director General and CEO, Giovanni Bisignani paid a lot of left handed compliments to the Indian Aviation Industry and the Government, yesterday in New Delhi. He was very unhappy with the service tax on air tickets and said, “the Ministry of Finance has added $236 million to the cost of operating in India with an extension of India's 10.3% service tax from international premium tickets to economy and domestic travel as well, in contravention of the International Civil Aviation Organization (ICAO) rules. It is an embarrassing situation for such a relevant country as India-which is a member of the ICAO Council-to be ignoring rules that it has helped to develop”
Bisignani also said,
Developments in Delhi are impressive. For the first time India has a hub that could rival Singapore or Dubai, with plans to accommodate 100 million passengers by 2030. But I have concerns over Mumbai. By 2016, stop-gap measures may take capacity up to 40 million. But where is Mumbai's 100 million passenger plan? We must find a solution that is environmentally responsible. The clock is ticking and a conclusion is urgently needed. Mumbai is a great city. However history tells us that no city can remain great without effective transport links. It is time for all parties to work together to agree on a site and get on with it.
India allows 100% FDI in transit systems, ports, harbors, hotels, ocean transport and road systems. But airline FDI is restricted to 49%. Moreover, no foreign airline can invest in an Indian airline. The inconsistency is difficult to understand. Does it make sense that a non-Indian airline can own 100% of a green field airport project, but cannot invest a single Rupee in an Indian airline? The success of India's airlines should not be compromised by an archaic investment policy that isolates them from global trends.