The Economic Survey has called for rationalising the tax
regime for aviation turbine fuel (ATF).
“There is need to rationalise the tax regime particularly
value-added tax on ATF which is in the range of 20-30 per cent in most of the
states,” the Survey said. “The high operating cost environment owing to high
and rising cost of ATF coupled with rupee depreciation is making operations
unviable for carriers in India. Fuel prices for the airlines in the country are
higher by at least 40 per cent than in competing hubs in the region such as
Singapore, Hong Kong, and Dubai and this needs to be rationalised. The Ministry
of Civil Aviation is of the view that ATF should be included under the declared
category of goods under the relevant provision of the Central Sales Tax Act so
that a uniform levy of 5 per cent is achieved. A high tax regime for 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 Survey states batting for
rationalisation of ATF prices. The Survey said that out of Rs.65,000 crore
investment envisaged at airports during the XII Plan, Rs.50,000 crore is
expected from the private sector. However, it noted that domestic passenger
traffic and cargo throughput had declined during January-November 2012, to 106
million and 2.03 million tonnes respectively.
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