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Finance ministry (FinMin) has notified prosecution provisions for non-compliance with tax laws of domestic airlines. Finmin has incorporated these provisions in Section 46B and 46C of the Inland Air Travel Tax (IATT) Act.
According to a senior government official, the changes are intended to act as a deterrent to potential defaulters. The changes will not be effective retrospectively and will come into operation from May 14, 2003.
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IA clears first stage
of purchase plan |
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New Delhi: Indian Airlines aircraft acquisition plan has passed the first stage with the pre-Public Investment Board approval coming through on Thursday. The pre-PIB clearance is granted by a committee comprising of officials from the ministries of Finance, Civil Aviation and Planning Commission. The Rs 10,089-crore proposal for acquisition of 43 Airbus aircraft will now be put up for clearance of PIB. After PIB’s approval, the proposal will be put up to the CCEA. The government has asked the airline to revise the project cost downwards, taking into account the rupee appreciation. ENS |
FinMin was prompted to take this measure to counter litigation and the wilful non-compliance of airline companies to deposit the tax with the exchequer after collecting it from customers. According to sources, IATT constitutes 15 per cent of the basic fare.
As per Section 46B, if a carrier fails to pay the tax collected, the offence is punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years with fine. Section 46C makes senior officials of aviation companies directly responsible for such defaults and they are liable to be prosecuted unless they prove that the offence was committed without their knowledge.
IATT is collected on an everyday basis and a daily business statement is sent to customs commissioner of the relevant area. A monthly record of the collection, which according to industry estimates is to the tune of Rs 27-28 crore, is presented in a reconciliation statement to the customs department.
According to sources, the tax began as Gulf surcharge in 1991 and has become a regular feature. The aviation industry has been lobbying for the removal of this tax. In the past, the tax has resulted in litigation by erstwhile domestic carriers such as NEPC and Modiluft. Industry sources also feel that the latest changes will improve tax compliance of the aviation companies.
