India asks for Kingfisher’s income tax

 
Marion Dakers
STRUGGLING carrier Kingfisher Airlines owes the Indian government two years of income tax, the country’s finance minister said yesterday.

SS Palanimanickam, minister of state for finance, told the Indian parliament that Kingfisher has around 1.3bn rupees (£15.7m) of employees’ tax deducted at source that has not been deposited with the government.

He added that the firm has committed to pay the sum by March 2012.

The government has started proceedings to recover the cash from the last two fiscal years, levy interest on delayed payment, and take further statutory actions, the minister said.

Kingfisher’s press office did not respond to requests for comment.

The airline has suffered a torrid winter, with reports this week suggesting that lenders are holding off on doling out a $133m loan until the firm proves its viability.

Earlier this month, tax officials temporarily froze 11 of Kingfisher’s bank accounts after the airline failed to pay service tax dues.

Debt-laden Kingfisher, which has been grounding planes and cutting routes to stay in business, is still negotiating with its lenders for 7bn rupees of working capital loans. The Indian government has ruled out a bailout of the struggling aviation sector.

The airline, controlled by transport and beer tycoon Vijay Mallya, aims to cut debt to 37bn rupees through sale and lease back of aircraft, selling off a property in Mumbai and converting rupee loans into lower interest foreign loans.

In November, it said its quarterly losses had doubled to 4.69bn rupees.

Kingfisher’s India-listed shares closed down 1.6 per cent yesterday at 21.40 rupees – less than a third of their value at the start of the year.