Air fares may get lighter on jet fuel tax rejig

New Delhi: The government is examining the possibility of notifying jet fuel as a ‘declared good’ . This would ensure that jet fuel attracts
uniform sales tax of 4% across the country, against the prevailing average sales tax rate of 21%. If this were to happen, airline companies, which have largely resisted reducing fares despite a fall in fuel prices, are likely to do so. This should come as a major relief to air travellers who have seen an almost 100% jump in travel costs in some cases in the early months of financial year 2008-09 .
“The issue of high sales tax on ATF and ways of rationalising this was discussed in a meeting on Tuesday. The law ministry has been asked to look into the possibility of bringing an ordinance in Parliament in the absence of a finance bill to put ATF into ‘declared goods’ category. The civil aviation ministry would also take up the issue of sales tax with the states on one-on-one basis,” a person close to the development told ET on condition of anonymity.
A committee of secretaries (CoS), which was set up in August to look into the financial crisis being faced by airline companies, had a meeting on Tuesday. It has asked the law ministry to explore if an ordinance could be issued to notify the fuel as a declared good.
The government recently announced a bailout package for airline companies, which included measures like removal of the 5% customs duty on jet fuel and an extended credit period for airline companies to pay off their outstandings to oil companies.
19/11/08 Nirbhay Kumar/Economic Times

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Categories: Indian Aviation- In General Nov 2008