Date:22/09/2004 URL: http://www.thehindubusinessline.com/2004/09/22/stories/2004092201280300.htm

Back No service tax for export cargo by aircraft operators

Ashwini Phadnis
K.R. Srivats

New Delhi , Sept. 21

EXPORTERS using the air route to transport their products to overseas markets have cause for cheer. The Finance Ministry has exempted "taxable services" provided by an "aircraft operator" in relation to transport of export cargo from the levy of service tax.

Transport of goods by air services has been brought under the service tax net from September 10, this year. In addition to the actual airfreight charges, service tax is applicable on all other charges collected by airlines towards storing, handling, loading/unloading (done in relation to air transportation of cargo).

In the latest Union Budget for 2004-05, the service tax rate has been hiked from 8 per cent to 10 per cent.

An aircraft operator has been defined, for the purpose of service tax, as any commercial concern that provides the service of transport of goods by an aircraft.

Informed sources said that the revenue department's move to grant service tax exemption on transport of export cargo by an aircraft operator is aimed at ensuring that taxes are not exported from the country.

During the financial year ended March 31, 2003, the airports managed by the Airport Authority of India (AAI) together handled about 9,82,000 tonnes of cargo. The total cargo traffic at Delhi airport stood at about 2,76,000 tonnes with domestic cargo accounting for 28 per cent.