Change the way ATF is taxed, suggests survey

New Delhi: Terming taxes on Aviation Turbine Fuel (ATF) as significantly higher than the tax rates in other countries, a report submitted to the Civil Aviation Ministry has called for change in taxation of ATF from ad valorem tax to a specific tax or classifying ATF as a ``declared good’’ which will lower taxes on the airline fuel 4 per cent.
In a report ``Aviation Turbine Fuel in India – Examination of pricing and Tax Regime Governing ATF’’ conducted by Chennai-based Nathan Economic Consulting India Ltd, it has argued that the country should follow the Chhattisgarh model which has reduced the rate on ATF to 4 per cent and now enjoys both economic growth and gross tax revenue benefits. It suggested that ATF taxes should be brought down to manageable level by either changing it from ad valorem to specific tax (charged on volume not value of the product). ``Another solution would be to classify ATF as a ``declared good’’ which will lower local taxes on ATF to 4 per cent, identical to the tax rate of Chhattisgarh,’’ the report said.
In India, if a commodity is given ``declared good’’ status, the good is subject to a significant reduction in VAT. In the long run, taxation on ATF should be incorporated into GST when the new tax system is adopted by the country, it said.
24/05/12 Sujay Mehdudia/The Hindu

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Categories: Indian Aviation- In General May 2012