States to roll back jet fuel tax cuts

New Delhi: State governments have raised serious reservations against a plea by the aviation ministry and domestic carriers to reduce sales tax on aviation turbine fuel (ATF).
Worse still, states like Kerala which had reduced the tax rate from 28.5 per cent to 4 per cent to encourage carriers to buy from the state have decided to take back the benefit alleging that it is not being passed on to the customers as promised. The state government is now planning to hike the rate to 20 per cent. The decision was conveyed at a meeting of the empowered committee of state finance ministers on oil that was held in New Delhi today.
Andhra Pradesh, Maharashtra and Rajasthan have also reduced sales tax on ATF to 4 per cent.
"All state governments agreed on this. We also decided that instead of letting the Centre play states against each other and have different tax rates, we should have a common tax rate for ATF. It will definitely be more than 12.5 per cent. But we will have to see if other states agree on 20 per cent," Kerala Finance Minister Thomas Isaac said.
According to sources, even Karnataka officials said they were not interested in decreasing the tax.
17/06/08 Anirban Chowdhury/Business Standard

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Categories: Indian Aviation- In General Jun 2008