Budget 2013: FICCI seeks direct tax incentives for civil aviation

NEW DELHI: In its pre-budget 2013 memorandum, Federation of Indian Chambers of Commerce and Industry ( FICCI) has asked the government to amend Section 72A of the Income Tax Act to extend the benefits therein to the entire airline industry and not only to public sector companies.

This amendment should be made with a view to providing the private airlines operators a level playing field as well as sustaining the current growth of the civil aviation sector, said FICCI. "Section 72A of the Income Tax Act relates to carry forward and set off of accumulated losses and unabsorbed depreciation in the event of amalgamation or demerger," explained FICCI.

FICCI also suggested that Section 10(15A) of the Income Tax Act may be reinstated. "This exemption was withdrawn for operating leases (for aircrafts/engines) which are entered into after 1st April 2007. This has put significant burden on the airline industry," justified the industry body.

Further, FICCI said that as per the current provision of the Income Tax Act, airlines have to incur additional costs arising out of withholding tax on maintenance related payments towards labour charges and fees for technical services and royalties. These provisions need to be withdrawn and such payments allowed without requiring the tax to be deducted at source, said FICCI.

FICCI also recommended for provision of tax incentives for development of Maintenance, Repair and Overhaul ('MRO') facility in India which will help airlines to reduce cost of repairs carried overseas but will also develop India as a hub for such facility.