Industry body Associated Chambers of Commerce and Industry of India (Assocham) on Monday called for granting infrastructure status to airports, besides classifying aviation turbine fuel (ATF) and cement as declared goods to bring a uniform tariff structure across the country.
This will facilitate emergence of airports as hubs and lower tariffs for passengers. The Indian aviation industry is being adversely affected as tax rates on ATF vary substantially from state to state, Assocham said.
“ATF comprises nearly one-third of an airline’s operating cost and hence may be brought under the ambit of Goods and Services Tax (GST),” said D S Rawat, secretary general of The Associated Chambers of Commerce and Industry of India (Assocham), in its pre-budget memorandum for the Union Budget 2012-13. He also called for clarity on applicability of GST for imports meant for warehousing to be sold at duty free shops in airports. Emergence of low cost carriers has led to a boom in air travel and the number of passengers at Indian airports is expected to grow to 450 million by 2020.
Thus huge investments are required to develop, modernise and expand the airport infrastructure. Tax holidays for initial years, concession tariff for certain services like electricity use and moderate rates of customs duty, excise duty, value added tax and sales tax will attract investments.
There should be exemption from customs duties on all
security systems like x-ray baggage inspection systems, explosive detectors, robots scanning bombs or suspected baggage, parameter security intrusion systems, hydraulic bollards, boom barriers and cameras for closed circuit televisions.
Under the Foreign Trade Policy, airport operators are eligible for Served From India Scheme (SFIS) scrips and development projects are eligible under Project Import benefits. The customs Electronic Data Interchange system may be amended to allow the use of SFIS scrips for payment of duties.
To promote tourism, Rawat called for encouraging purchase from Indian duty free shops by increasing duty free allowances for incoming international passengers from Rs 25,000 to Rs 50,000.
He said there should be exemption or deferment of minimum alternate tax applicability by at least five years of commercial operations of infrastructure projects of national interest like airports. Or else, the MAT rate should be halved to 10 per cent of book profits.
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According to the PDEXCIL, post such a mega cluster, the industry expects a global share of 10 per cent by 2017-18 from current 5.2%