Search the Internet          Tips  Sites: Finance, Investment

CBDT slaps Rs 80-million demand notice on Air-India

Rumi Dutta

The Central Board of Direct Taxes has issued a Rs 80-million demand notice to Air-India, payable as tax on the difference amount between the published fare and the net fare, as per the tariff regime applicable till March 31, 2002.

It is learnt that some of the other international airlines have also been slapped similar notices.

Subsequently, international airlines led by A-I have appealed to the CBDT to reconsider the demand notices.

As per the previous tariff system, the difference between the published fare and the net fare (in other words the discount component), according the tax authorities, are taxable. The amount outstanding against Swiss Air Lines under this clause is around Rs 25 million.

An A-I spokesperson said, "We are contesting the issue with the tax authorities and have appealed to income tax authorities as per the procedure. How can a tax accrue on an income not earned?"

Earlier, the published fare, which is the amount printed on the ticket, was far less than the net fare that the agents actually paid the airlines. The difference was the discount component that the airliners passed on to the agents.

The agents, in turn, passed on the discounts to the customer. Hence, airliners as well as the travel agents are refusing to pay a tax on the income which is not retained by them.

The change in the tariff system with effect from April 1, 2002, is in fact, a fall out of the tax deduction at source issue.

As per the new tariff system, the fare printed on the ticket would be the net fare and the discounts would henceforth be in-built in the net fare.

Powered by

ALSO READ:
The Rediff Budget Special
The Rediff-Business Standard Special
Money

Tell us what you think of this report