Reduced ATF tax may echo in Delhi, Mumbai

New Delhi: Recent moves by the governments of Rajasthan and Andhra Pradesh to reduce sales tax on aviation turbine fuel (ATF) to 4% from 20%, which could potentially save up to 10% of operating costs for airlines, could put pressure on the governments of Delhi, Maharashtra and Karnataka to match them or risk seeing a sharp decline in the number of flights that refuel in cities in these three states.
The airports in New Delhi and Mumbai account for not just half the passenger traffic in the country, but also 40% of ATF consumed in India. Maharashtra, which levies a concessional sales tax on ATF at all its airports except Mumbai and Pune, has already indicated it is considering lowering the 25% sales tax in Mumbai and Pune to 4%.
And Karnataka’s chief secretary Sudhakar Rao said the state government was also looking at reducing the ATF sales tax, but a decision would only be taken after the state elections are over.
The only states that levy a 4% tax on ATF are Rajasthan, Kerala and Andhra Pradesh, which lowered the sales tax shortly before the new Rajiv Gandhi International Airport at Hyderabad was opened for commercial use last month.
29/04/08 Tarun Shukla/Livemint

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Categories: Indian Aviation- In General Apr 2008