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Monday, 15 January, 2018, 11 : 30 AM [IST]

Budget 2018: Airlines want lower tax burden on pilots to stop 'brain drain'

According to a Business Standard report, higher salaries and tax-free income from West Asian and southeastern airlines have for long snatched pilots away from Indian carriers. Now, a surcharge levied by the Indian government on high-income individuals is proving to be a burden. Airlines now hope that the upcoming budget will give them relief.

Finance minister Arun Jaitley, in the last budget, had proposed to increase the surcharge on income tax for individuals with a total income of over INR 10 million from 12% to 15%. Commanders of Indian airlines normally fall under the INR 10 million salary bracket and have to pay the surcharge. But in order to make their salary package attractive, airlines bear the expense of surcharge.

A senior government official said that in their budgetary demands, airlines have asked for abolishing the surcharge part or give exception to companies where this tax is borne by the employer.

“Indian carriers are grappling with the pilot shortage and to stop them from migrating abroad, they have opportunities across the world primarily from West Asian carriers where income is tax free, airlines have no choice but to bear the extra burden of surcharge in addition to the tax,” said an executive of a private airline.

India has been a favourite hunting ground for cash-rich middle-eastern carriers. Etihad, Emirates and Qatar Airways have been combined hired more than 100 pilots in last six months offering fat pay cheque. The shortage was so alarming that the airline lobby group Federation of Indian Airlines (FIA) persuaded aviation regulator DGCA to increase notice period for commanders from six months to one year.

“The surcharge puts an additional tax burden of INR 92,700 on individuals having a net taxable income of INR 10 million,” said Ashok Munjal a Delhi-based financial planner, adding that due to the surcharge hike, the tax rate for the highest slab jumps to 35.5%.
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