Domestic airlines pay eight times more tax on ATF

New Delhi: Domestic airlines pay 66 per cent tax on aviation turbine fuel, eight times higher than what international carriers are charged to buy ATF in the country, industry body Assocham said on Monday.
The higher rate of tax is eroding the profitability of Indian carriers by 11-16 per cent, it added. The jet fuel is the largest component of operating expenses for airlines accounting for almost 35-40 per cent of their total cost, the chamber highlighted in a paper.
Assocham President Venugopal N Dhoot said if the government reduces sales tax on ATF by about 10 per cent and customs by 4-5 per cent, the domestic aircraft industry can save about Rs 6,000 crore annually.
The paper further points out that the aviation industry is impacted significantly by multi-layered indirect tax system, which includes value-added tax, service tax, excise duties and customs duties.
The impact of indirect taxes is not uniform and there is substantial variation between the tax treatments for different types of carrier and it needs to be corrected, Dhoot said.
14/04/08 PTI/Economic Times

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Categories: Indian Aviation- In General Apr 2008