Global airlines' body IATA has asked the government to roll back a proposal to

RELATED ARTICLES EU green tax: Global airlines warn of retaliatory action EU green tax: Global airlines warn of retaliatory action Govt may exempt skill providers from service tax in budget Govt allows foreign airlines' 49% stake in Indian carriers Carbon tax on airlines: India may put curbs on EU carriers

impose service tax on domestic and international air tickets on all classes, saying it would not only be counter-productive but also go against India's overseas obligations.

"I am writing to urge you to roll back fully the service tax applicable to domestic and international air transport (namely the tax applied to first, business and economy class tickets, and cargo)," International Air Transport Association chief Giovanni Bisignani said in a recent letter to Finance Minister Pranab Mukherjee.

The 2010-11 Finance Bill, tabled in Parliament, proposed to expand the scope of air transport services "to include domestic journeys and international journeys in any class" for a 10 per cent service tax. Currently, the tax is imposed only on foreign travel by First

or Business Class.

Opposing "in the strongest terms" the "unacceptable" proposal, he said the service tax "not only contravenes (UN body) International Civil Aviation Organisation's policies, but is also counter-productive".

He quoted published studies to show that a 10.3 per cent of service tax and cess would increase the cost of tickets, which would lead to a fall of 8 per cent in air travel and have a resultant decline in revenue of the airline industry by over USD 300 million per annum.