Lower taxes on jet fuel

Domestic flying could become cheaper if the Economic Survey’s suggestion for rationalisation of the tax regime, particularly value added tax on aviation turbine fuel, is taken forward in the Union Budget.

The VAT component on ATF varies from 20-30 per cent in various States.

The high cost of ATF, which is almost 40 per cent higher than what airlines pay in Singapore, Hong Kong and Dubai, is one of the reasons for airlines in India being in poor financial health. ATF constitutes 40-45 per cent of the operating costs of domestic carriers as compared with 20-25 per cent globally.

It is believed that the Survey gives indication about measures to be included in the Union Budget which is to be presented on Thursday.

In December last year, Civil Aviation Minister Ajit Singh and Petroleum Minister Veerappa Moily had planned to jointly approach the Finance Ministry to convince it to notify ATF as a ‘declared good’ which will attract a uniform five per cent sales tax throughout the country.

 “A high tax regime for aviation in general and ATF in particular will reduce the wider economic benefits available from aviation in general and ATF in particular will reduce the wider economic benefits available from aviation, resulting in a negative impact on economic growth and overall Government revenue bases,” the Economic Survey tabled in Parliament on Wednesday points out.

 The Survey adds that it is equally important to have transparent pricing regime for ATF in India.

http://www.thehindubusinessline.com/industry-and-economy/economy/lower-taxes-on-jet-fuel/article4458537.ece