• Wed. May 11th, 2022

Budget expectations for airlines: Pandemic-hit airline industry wants MAT suspended and levy cut for sector in 2022 budget

Domestic air travel in India posted its best month after the pandemic began in November last year, but the Omicron variant halted the recovery. The government had decided to allow regular international flights to and from India from December, but the order was canceled due to rising infections. Domestic passenger numbers fell 25% in the first week of January. Rising fuel prices are expected to further weigh on the sector as fuel accounts for up to 45% of the cost of operating airlines in India. reports Mihir Mishra.

BUDGET RECOMMENDATIONS

  1. Subject the fuel to the GST (the decision to subject the jet fuel to the GST can be taken by the GST Board
  2. Consider incentives in terms of tax breaks or tax reduction for the sector. The airline industry says it is taxed up to 21%, but there is no input tax credit, as is the case for other sectors.
  3. Suspension of the Alternative Minimum Tax (MAT) for the aviation and airports sector for at least two years, or reduction of the MAT from around 18% to 5%
  4. Extend the preferential rate of [email protected]% for earthworks related to the construction of airports by the private sector as well
  5. Baggage allowance should be increased from Rs 50,000/- to Rs 100,000/- for purchase from duty free shop in India
  6. The increased allowance will help Indian airports to improve their commercial revenue and the resulting benefits would be Increased foreign exchange earnings among others