Airlines' may lose tax benefits on rental

New Delhi: Airlines reeling under losses due to competition have one more reason to worry. The government is expected to end the tax exemption on lease rentals for aircraft which is available till March this year.
While airlines have been in a rush to buy aircraft, they have also resorted to selling them to another company and then leasing them back. The move helps them show lower losses and also benefit from the tax exemption.
The airlines and the civil aviation ministry have argued that the withdrawal could severely affect their bottomlines since the exemption could have helped them fight competition better and meet the rising demand in a market which is amongst the fastest growing in the world.
The exemption on lease incomes, available under section 10(15A) of the Income Tax Act, was withdrawn for agreements signed after March 2005. Later, the cut-off date was extended to September 2005 and then extended on two more occasions following hard lobbying by airlines. The latest sunset clause expires on March 31, 2007.
19/02/07 Times of India

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Categories: General Aviation feb 2007