Abolition of FBT to help aviation sector save crores

New Delhi: The domestic airline industry has welcomed the Budget doing away with the Fringe Benefit Tax (FBT).
Airlines had to pay FBT on a variety of expenditures, including hotels booked for crew to stay, cars used to transport crew and also free air tickets that were provided to the personnel as part of their annual pay package. It is estimated that a large-sized airline, having both international and domestic operations, would have to set aside almost Rs 50 crore annually towards FBT.
“The FBT was a cost. Its abolition has come at a time when the industry is trying to save every rupee. It is most welcome,” a senior Air India official said. Welcoming the move a spokesman of Kingfisher Airlines said it will lead to a saving of about Rs 15 crore annually, the Executive Director, Bird Group, Mr Ankur Bhatia, felt that the abolition of FBT will bring down the average immediate costs for airlines.
“Earlier, despite losses, given that FBT was linked to expenses, it meant an increased cost for the airlines. Also, foreign airlines, otherwise not required to pay income taxes in India, had to pay FBT resulting in increased cost and compliance,” said Mr Kuljit Singh, Partner (Infrastructure, Real Estate and Government), Ernst & Young.
07/07/09 Business Line

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Categories: Indian Aviation- In General Jul 2009