Air India piles up Rs 454-cr service tax dues

New Delhi, May 20: Five months after its accounts were frozen for non-payment of taxes and duties, crisis-ridden

has piled up about Rs 454 crore of dues but has promised to clear it as soon as it gets capital infusion from the government.

"The total service tax dues of Air India is Rs 395 crore. We will recover interest at the rate of 15 per cent. Once the capital infusion happens, the company will repay the dues," official sources said.

Taking into account the 15 per cent interest, the total tax dues of the company will come to around Rs 454 crore. Government last month approved a financial restructuring plan for Air India with a Rs 30,000 crore equity infusion over a nine-year period.

The airline intends to clear the dues as soon as the government releases funds to it, the sources said. Last December, the Central Board of Excise and Customs (CBEC) had frozen 11 bank accounts of Air India and 10 of Kingfisher Airlines for allegedly defaulting on service tax payments, despite collecting the same from passengers. The matter was settled after payment of part dues and hectic negotiations.

According to government officials, the total arrears pending from Kingfisher is Rs 50 crore. The company has paid arrears between Rs 15-20 crore each in the months of March, April and May.

Non-payment of service tax dues is a serious offence as it amounts to diversion of public money or tax revenue already recovered by the airline from the passengers or other parties for depositing with the government. Airlines collect service tax on every ticket they sell.

So, the money comes from the passenger and airlines are expected to submit it to the government in a time-bound manner and not keep it in their accounts, the officials said.

PTI