Airlines and India Budget 2008-09

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In this paper we will discuss the demand of the Federation of Indian Airlines before the publication of budget 2008 - 09. The airline sector expects some positives from the budget.
The budget 2008 - 09 is about to publish after three weeks. Therefore, competition among the public and private airlines have started already to have some ground in their favor in the budget. The Federation of Indian Airlines (FIA) has made a request to the Finance Minister to provide some facilities, for example, income tax relief, for those private sector airlines who are going to merge. The government had relieved the income tax for Air India when they merged with Indian airlines.

The FIA argued that the government should allow the private sector companies involved in the aircraft operating business to carry forward. However, the Finance Act 2007 had extended the carry-forward benefits for which the Indian-Air India merger was possible. But the other two mergers, namely, Jet Airways - Air Sahara and Kingfisher Airlines - Air Deccan took place without the income tax facilities given to the state owned airlines.

In the pre-budget memorandum, the Federation made it clear that several things like, expenses for the crew, concessional and free passage given to the executives and their families, expenses on in-flight entertainment and catering, hotel accommodations for the passengers in case of delays and cancellations will not be granted as fringe benefits. Therefore, the IFA expects that tax on fringe benefits will be relaxed to some extent by the government.

Moreover, the FIA also sought for a tax exemption for the oversees engineers and pilots which was available earlier for 3 years from the very date they arrived in India. It argued that this is needed to cope up with the shortage of efficient pilots in the country.

The Federation of Indian Airlines also wants that the government ought to review the service tax imposed on first as well as business class international travel, on air navigation fees, airport fees and landing.

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