IATA calls service tax on luxury air travel illegal

Sep 24, 2010 |

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Sept. 23: International civil aviation trade body IATA has criticised the finance ministry’s decision to impose service tax on international first and business class tickets since 2006, saying that “such taxes are illegal by International Civil Aviation Organisation (ICAO) rules.” The IATA director-general (DG) Giovanni Bisignani also termed the financial condition of Indian carriers as precarious, saying he was concerned about their $13 billion debt.

Talking about the imposition of the aforementioned service tax by the Indian finance ministry — which he termed as illegal — the IATA DG said, “It is an embarrassing situation for such a relevant country as India is an ICAO Council member and a signatory to the Chicago convention.

While pointing out that private Indian carriers are now reporting profits or shrinking losses after the recession, the IATA DG nevertheless said, “Indian carriers will still lose an estimated $0.4 billion this year. And I am concerned about their $13 billion debt.

In a market as rich in potential as India, this precarious financial situation indicates that structural weaknesses must be addressed.”

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