Rs 10 lakh crore tax will be levied on the profits of the airline, with the proceeds to be split equally between the airline and the government.
The airline, which will be the sole bidder for the airline’s stake in the national carrier, said the tax hike is to help it expand its business in the country.
“We are not going to pay any tax on the earnings of our airline, as we do not have any earnings from this business.
But the government is looking at us and we have to respond to them,” said Anirudh Ravi, the chief executive officer of the Mumbai-based airline.
“The government is trying to increase the taxes and it will not work.
It is unfair to the airlines,” Ravi added.
The Indian Tax Authority has said the airline will have to pay at least Rs 9,000 crore tax on its profits in the next five years, including the next financial year, to be decided by the Centre.
“It is the government’s intention to increase tax on airlines in India from Rs. 8,100 crore to Rs. 10,200 crore.
The government is also looking at the tax levied on Roti Rajan,” said an official in the tax department.
Ravi said he was not sure if the tax on his airline’s earnings will be increased.
“There is no tax on Rariavans earnings in India, but we are considering the possibility of the government imposing a tax of Rs. 6,500 crore,” he said.
Ravi said the government should not take any decision on the airline until it is informed about its business plans.
The airline’s revenue in India has been in decline since 2009 and this year the airline is not profitable.
The company said it would pay the government an upfront payment of Rs 2.3 crore for the stake in 2019 and an additional payment of $250 million to secure its future.
“In 2019, the revenue will be at Rs 3.8 crore and the cost of the stake will be around $2.3 billion.
The revenue and cost will be borne by the Indian government, and we are confident that the government will pay all dues for the interest paid on the debt,” Rami said.
The government had already levied an additional tax of about Rs 2,000 per passenger for the next four years, on the amount over Rs 50 lakh in taxes.
The tax on income earned by Roti is to be levied at the rate of about 2.5 per cent.
The total tax imposed on airline income will be about Rs 7,600 crore, Ravi estimated.
Roti, who is in the midst of a yearlong stay in Singapore, will return to India for the first time in five years.
His family members are expected to return from Singapore this month, he said, adding that he is confident that he will be able to return home.
Rami’s stake will now be divided equally among the company and the company’s employees.
“My family and I will share the profit equally,” he added.