The airlines have claimed that foreign pilots insist on a tax-free salary, knowing that India faces a shortage of experienced pilots at senior level.
In their budget proposal, airline lobby group, the Federation of Indian Airlines (FIA), said that air carriers have to currently gross up salaries of expat pilots and bear the taxes. This results in increase of expense for airlines by 50 per cent on this account.
"It is recommended either not apply section 195A in case of payment to be made to an employee or tax paid by company on behalf of employee should be an allowable expense as business expenditure," the FIA, which represents three private carriers, said.
Section 195 of the Income Tax Act deals with TDS for the non-resident people of India.
With high traffic growth in domestic and induction of new type of aircraft in their fleet, the industry has been facing a shortage of type rated pilot-in-command.
To cover the shortage of type rated pilots-in-command, validation of foreign pilots is done as per rule 45 of Aircraft Rules, 1937. The foreign pilots are phased out by the airlines once the co-pilots inducted by them gain the mandated requirements for being designated as commander.
Till June 2019, domestic airlines employed 404 foreign pilots. As per official data, various airlines had 324 foreign pilots on their rolls in 2018 against 378 in 2017.
An airline executive said that expat pilots generally get a monthly salary of Rs 10-15 lakh and given 33 per cent tax on it, the airlines have to bear a cost of Rs 3-4 lakh.
The Civil Aviation Ministry has advised airlines to develop pilot training programmes in order to reduce the dependency on foreign pilots.
While there is a shortage of pilots at commander-level, there are sufficient commercial pilot license (CPL) holders in the country.
( With inputs from IANS )