High tax on ATF cuts into profitablity of domestic carriers

New Delhi: Industry body Assocham today asked the government to reduce sales tax on jet fuel to enable the aviation industry save resources for investment in infrastructure.
Observing that high incidence of taxation on Aviation Turbine Fuel (ATF) was eroding the profitability of domestic carriers, Assocham President Venugopal Dhoot said if the sales tax was slashed by about ten per cent and customs duty by 4-5 per cent, the domestic aviation industry can save about Rs 5,000 crore of annual revenue on it.
This amount could be utilised to build airport infrastructure, he said.
The high tax on ATF for domestic carriers like sales tax, central excise, import duty and education cess works out to be 66 per cent as against eight per cent for overseas airlines, the chamber said in a study.
This adversely affected the profitability of full service carrier by about 10.5 per cent and low cost carriers by around 15 per cent.
14/09/07 PTI/Economic Times

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Categories: General Aviation Sep 2007