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Money News

More trouble for Kingfisher over tax

NEW DELHI (Reuters) - Cash-strapped carrier Kingfisher Airlines KING.NS has not deposited with the government most of the income tax it deducted from its employees' salaries for the last two fiscal years, Minister of State for Finance told lawmakers on Tuesday.

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Kingfisher has about 1.3 billion rupees of tax deducted at source to be deposited with the government and has committed to pay it by the end of the current financial year to March 2012, S.S. Palanimanickam told parliament in a written reply.

“Survey has been conducted in case of Kingfisher Airlines, which revealed that the airline had not adhered to TDS provisions,” the minister said.

The government has initiated proceedings to recover the default amount, levy interest on delayed payment, and take further statutory actions, the minister said.

A Kingfisher spokesman did not immediately respond to calls and e-mail queries.

Earlier this month, tax officials had temporarily frozen 11 bank accounts of Kingfisher Airlines after the airline failed to pay service tax dues.

Debt-laden Kingfisher, which has been grounding planes and cutting routes to stay afloat, is scouting for funds and is negotiating with its lenders for 7 billion rupees of working capital loans.

It has a current debt of about 65 billion rupees to a consortium of banks led by top lender State Bank of India.

The airline aims to cut debt to 37 billion rupees through sale and lease back of aircraft, sale of a property in Mumbai and conversion of rupee loans into lower interest foreign loans.

Lenders to Kingfisher are awaiting a report on the airline’s viability before they approve a $133 million loan, sources told Reuters on Monday.

Shares in Kingfisher were down 1.84 percent at 21.35 rupees in afternoon trade in a weak Mumbai market. They had traded as high as 67.70 rupees in January.

Reporting by Anurag Kotoky; writing by Aniruddha Basu

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