Civil Aviation Secretary RN Choubey will soon write to chief secretaries of states to commit to lower value added tax (VAT) on aviation turbine fuel (ATF) supplied to airline companies for flying smaller planes.
The matter arose as ATF supplied to airlines for planes of less than 80 seats was considered a 'classified good' or 'declared good' under Central Sales Tax Act. CST got subsumed into the Goods and Services Tax and no category such as 'classified goods' exists now.
Under the CST Act, there were restrictions on the powers of states to impose sales tax or value added tax on a declared good and as such a declared good attracted a lower CST/VAT rate of 5 percent.
Now with CST gone and there no more being a category like 'declared good', ATF supplied to even smaller planes is now being charged at the same VAT rate as ATF for large planes which is as high as 24 percent in some states.
“So it's necessary and very urgent for states to separately state that they will not charge ATF at same level,” a source in the aviation ministry said.
13/07/17 Dhirendra Tripathi/Moneycontrol
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The matter arose as ATF supplied to airlines for planes of less than 80 seats was considered a 'classified good' or 'declared good' under Central Sales Tax Act. CST got subsumed into the Goods and Services Tax and no category such as 'classified goods' exists now.
Under the CST Act, there were restrictions on the powers of states to impose sales tax or value added tax on a declared good and as such a declared good attracted a lower CST/VAT rate of 5 percent.
Now with CST gone and there no more being a category like 'declared good', ATF supplied to even smaller planes is now being charged at the same VAT rate as ATF for large planes which is as high as 24 percent in some states.
“So it's necessary and very urgent for states to separately state that they will not charge ATF at same level,” a source in the aviation ministry said.
13/07/17 Dhirendra Tripathi/Moneycontrol
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