Finance Minister Nirmala Sitharaman on Tuesday said the government will start issuing e-passports in the 2022-23 fiscal year to make passports access easier for citizens.

“Issuance of E-passports will be rolled out in 2022-23 to enhance convenience for citizens,” said Sitharaman in her budgetary speech in the Lok Sabha. 

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According
to the Economic Survey report, released on Monday, the Indian aviation sector
has started to bounce back with an accelerated pace of COVID-19 vaccine
roll-out and easing of travel restrictions globally. In 2021, the central
government took various initiatives to boost the aviation sector which included
the measured opening of the domestic sector as the first wave of the pandemic
ebbed and the introduction of air transport bubbles or air travel arrangements
with specific countries, it mentioned.

“The
domestic traffic in India has more than doubled from around 61 million in
2013-14 to around 137 million in 2019-20, registering a growth of over 14
percent per annum,” said the Economic Survey released by the government. The
Survey stated that the Centre took various steps to boost the Indian aviation
sector such as disinvestment of Air India, privatisation, modernisation and
expansion of airports, boost to the regional connectivity scheme – UDAN and
incentivisation of maintenance, repair and overhaul (MROs) operations.

The civil aviation industry was expecting the government to reduce taxes on jet fuel in the Union Budget to spur a recovery of the pandemic-battered sector.

The civil aviation sector was expecting a cut in taxes on aviation turbine fuel (ATF), which comprises 25%-40% of an airline’s operating cost, and other incentives. At present, some state governments charge as high as 25%-30% value-added tax (VAT) on ATF.

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According to a report by rating agency ICRA Ltd, the aviation industry was expecting financial support from the government and a reduction in levies and taxes in the immediate near term to revitalize operations and boost passenger traffic. Among its key expectations are reducing taxes on ATF and reducing airport fees, parking, landing, and navigation charges.

Airline officials had suggested the inclusion of ATF in GST with immediate effect, tax breaks, and eligibility for the input tax credit.

Previous Budget

In the Union Budget 2021-22, the government provided several tax incentives such as tax holiday for capital gain of aircraft leasing and financing companies and tax exemptions for aircraft lease rentals or royalty paid to foreign lessors. Customs duty was reduced from 2.5% to 0% on aviation sector components or parts, including engines. The budget proposed monetisation of the next lot of airports for operations and management concessions.