Declared goods status for ATF will ensure VAT at a uniform rate across states

In the recent months, the aviation sector appears to be undergoing a recovery and the worst seems to be over.
The industry is looking forward to the upcoming Budget with the expectation that its long-standing demands be addressed so that they can complete the recovery and restart expansion. The key expectations are discussed below:
‘Declared goods’ status for ATF
High prices of ATF have been the bane of the Indian Aviation sector. One of the key contributors towards the high prices of ATF in India has been the high local taxes.
States impose varying rates of VAT on ATF and the rates are mostly on the higher side. It is pertinent to take note of the specific case of Andhra Pradesh, which had reduced the VAT rate on ATF to 4% in 2008. The Andhra Pradesh government has recently hiked the rate of VAT on ATF to 16%.
The significance of the adverse impact of high local taxes on ATF in India is evident from the fact that where the Association of European Airlines (AEA) members indicate that their fuel bill constitutes 13.3% of their total operating expenses, for Indian carriers the fuel bill constitutes 45-50% of the operating expenses.
‘Declared goods’ status for ATF would ensure that VAT would be leviable on ATF at a uniform rate of 4% across the states.
13/02/10 Sujit Ghosh/Fincial Express

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Categories: Indian Aviation- In General Feb 2010