The development cost of the much-delayed Navi Mumbai International Airport (NMIA) is all set to increase by over Rs550 crore, thanks to removal of exemption of service tax for all upcoming airports and ports announced in the latest Union Budget.
The development cost of the much-delayed Navi Mumbai International Airport (NMIA) is all set to increase by over Rs550 crore, thanks to removal of exemption of service tax for all upcoming airports and ports announced in the latest Union Budget.
The present projected cost of the airport stands at more than Rs14,500 crore, up from about Rs8,000 crore in 2008.
"Service-tax exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port withdrawn." reads the budget script read out by finance minister Arun Jaitley on February 28.
According to government officials, despite the NMIA project being first conceptualised in late 1970s, it didn't take off due to protracted negotiations with farmers over land acquisition.
The farmers wanted a compensation of Rs20 crore per hectare, or 35% of the land back as developed plot. However, the government was unwilling to offer more than 22.5%.
The picture started becoming clearer in November 2014 after the state government and farmers from Ulwe village near Panvel reached an agreement on the compensation package. The state agreed to give 22.5% of the acquired land back to the farmers as developed plots.
"The land issue has already raised the projected cost. The removal of exemption will further shoot it northward," said an NMIA official.
Sources say that the airport developer will now have to pay service tax towards getting workers, design team, etc. on contract.
NMIA is being developed as the Chhatrapati Shivaji International Airport is nearing saturation and an alternate airport is urgently required to relieve the pressure on it.
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