Airlines hope ATF to be in ‘declared goods’ list

Mumbai: Though the recent stimulus package announced by the government to boost the economy did not have any sops for the aviation sector, airline operators and analysts are awaiting the proposal demanding a uniform 4% sales tax on aviation turbine fuel (ATF) to be tabled in the parliamentary session which commences Wednesday. The current rate of sales tax on ATF varies between 20% to 30% across various states.
ATF accounts for almost 40% of an airline’s operating costs and the fuel prices has dropped almost 50% since hitting a high of Rs 73,673.56 per kilolitre in August.
It may be recalled that industry bigwigs have been lobbying with the civil aviation ministry in the past few months to include ATF in the list of declared goods so that the sales tax on ATF will come down to a uniform 4% across the country. An executive of a Delhi-based low cost carrier says, “The stimulus package would have been a one-time relief and would not have eased the financial burden of the sector in the long term. We are hopeful as an industry that the government will most likely declare ATF as a ‘declared good’.”
Even industry watchers say, aviation turbine fuel which attracts different tax structures in various states need to be uniform across the length and breadth of the city. The executive further said the sector is pinned down by wrong taxation policies. “If the ATF attracts nominal taxes, carriers would be able to compete with not only domestic but international carriers too,” he added.
10/12/08 Shaheen Mansuri/Financial Express

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Categories: Indian Aviation- In General Dec 2008