No major relief for loss-making aviation sector

The Budget proposes to increase service tax by 2.4% for executive (business/first class) air travel.

The abatement for executive (business/first class) air travel, wherein the service element is higher, is being reduced from 60% to 40%. Budget 2015: Complete Cvoerage

Consequently, service tax would be payable on 60% of the value of fare for business class.  

Stocks to watch  

SpiceJet and Jet Airways  

Outlook  

The Budget is negative for the civil aviation sector as as government has proposed to increase service tax by 2.4% for non-economy class air travel.

The last Budget had announced schemes for development of new airports in Tier I and Tier II cities.

However, it did not have anything specific for the aviation companies.

The industry had been seeking updation of standards for security equipment, establishment of a “green” channel for maintenance, repair and overhaul (MRO) equipment and allocation of appropriate funds for air navigation facilities.