ATF set to get "declared goods" status, air fares likely to fall

There is good news for high-fliers. Finance Minister P. Chidambaram said that a Bill will be introduced soon in the coming session of Parliament to give aviation turbine fuel (ATF or jet fuel) the status of "declared goods."
In his address at the Economic Editors' Conference in New Delhi, Monday, Chidambaram said the "declared goods" status will bring down the central sales tax (CST) rate on ATF to about 4 percent. Currently, the tax varies between 4 percent and 30 percent from state to state. If the Bill is passed successfully, it would be a huge relief to cash strapped airline companies as well as passengers.
"I have told the Minister for Civil Aviation that if he can marshal support for the Bill in Parliament, we can introduce the Amendment in the Central Sales Tax Act," Chidambaram said.
A political consensus is needed for the move to be successful as this is a Money Bill and is considered a confidence vote for the ruling party.
Once the Bill turns into law, the states may have to bear a combined revenue loss of about Rs.2000-3500 crore, which they are presently collecting from airlines on ATF in the form of sales tax. It is believed that the main Opposition party, the Bharatiya Janata Party (BJP), is likely to support the move, though the Left Parties may not.
25/11/08 IBTimes India

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Categories: Indian Aviation- In General Nov 2008