Union Finance Minister P Chidambaram on Wednesday assured Civil Aviation Minister Praful Patel that his ministry would consider several demands raised by the latter in his coming Union Budget for 2008-09.

The issues taken up by Patel with Chidambaram included rationalisation of taxes and duties on aviation turbine fuel (ATF) by giving it “declared goods” status, dropping of service tax on international air journeys on Indian carriers and amending Section 72-A so as to benefit merger of airline companies.

On the ATF, Patel told the finance minister that the airline industry had recommended that ATF be given a “declared goods” status, thereby attracting a uniform four per cent rate of sales tax across India and that this should be considered by the ministry.

Customs duty on ATF for domestic operations may be reduced to five per cent and excise duty by four per cent. Exempt ATF and other supplies meant for consumption on international flights from ST/VAT, he told FM.

Raising the issue of levy of service tax on international air journeys from India on business and first class tickets, Patel said this had put Indian carriers at a disadvantageous position. This tax is not a global practice. On airline mergers, the aviation minister noted that as per the provisions of Section 72-A of the Income Tax Act, one or more public sector company or companies engaged in the business of operation of aircraft upon amalgamation with one or more public sector companies engaged in similar business, can avail the benefits of carry forward and set off of accumulated losses and unabsorbed depreciation.

Since mergers and acquisitions can be useful for sustaining the industry sector, the Act should be amended.