Airlines operating UDAN flights to connect regional towns have something to cheer with Finance Minister Arun Jaitley on Wednesday announcing that service tax will not be deducted from the viability gap funding (VGF) given to them. At present, 14% service tax is levied on such transactions.
The first flight under UDAN or regional connectivity scheme (RCS) is likely to take to the skies later this month. The VGF is being given to airlines as an incentive to operate cheap flights to tier-II and tier-III towns to enable more people to fly.
In his Budget speech, Jaitley said the exemption is being provided for one year from the date of commencement of operations of the regional connectivity scheme as notified by the Ministry of Civil Aviation.
As per Budget documents, Air India will get Rs 1,800 crore as equity infusion in the next fiscal, besides another Rs 2,308 crore as government investment in public enterprises. Air India had asked for Rs 2,844 crore as equity from the government for the fiscal year starting April 2017. For 2016-17, Air India was allocated Rs 1,713 crore against a demand of Rs 3,911 crore.
Altogether, the Civil Aviation Ministry was allocated Rs 2,702 crore for the next financial year, though in 2016-17 it has already shown an expenditure of Rs 3,452.33 crore.
While the Directorate General of Civil Aviation will get Rs 214.50 crore, up from Rs 156.72 crore, the Bureau of Civil Aviation will get Rs 86 crore, an increase from Rs 80.43 crore. Airports Authority of India (AAI) will get Rs 100 crore.
Published 01 February 2017, 20:58 IST