States asked to cut sales tax on ATF

New Delhi:Minister of state for civil aviation Praful Patel has recently written a letter to all state chief ministers asking them to bring down the rate of sales tax on aviation turbine fuel (ATF) in their respective state budgets in 2008-09.
The minister has said the sales tax on ATF has to be cut down to the declared goods rate of 4%, which ranges from 20-35% across various states. “Given the negligible contribution to the overall sales tax collection, the impact of a reduction of sales tax on ATF for the state exchequer will be negligible — especially in view of the upside that the states have seen through high price and increased uplift,” said ministry sources, quoting from the minister’s letter.
In fact, tax on ATF is in excess of 50% in some states. Worse, ATF in India is 70-80% costlier than many other countries. The airlines industry is now in deep distress with cumulative losses of over Rs 2,000 crore in 2006-07.
The single largest element contributing to the airlines costs is ATF which accounts for 40% of the operating cost of Indian carriers as compared to 20% for international carriers.
24/02/08 Raja Awasthi/Economic Times

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Categories: Indian Aviation- In General Feb 2008