 "Centre to meet states on lower tax on jet fuel")
Civil aviation minister Ashok Gajapathi Raju will be asking state governments to prune value added tax (VAT) on aviation turbine fuel (ATF).
He has called a meeting here next week of civil aviation ministers across the country. This will also be the final consultation with state representatives before the draft aviation policy is taken to the cabinet, in the last week of January.
He has called a meeting here next week of civil aviation ministers across the country. This will also be the final consultation with state representatives before the draft aviation policy is taken to the cabinet, in the last week of January.
The meeting, to be chaired by the union minister, will also be attended by the secretary of civil aviation Rajiv Nayan Choubey and R K Srivastava, chairman, Airports Authority of India (AAI).
A senior ministry official told Business Standard that at the meeting, another attempt will be made to convince states on the need to cut VAT on ATF, presently varying from four to over 30 per cent. The Centre will make an attempt to explain the multiplier effect of a vibrant aviation sector to the economies of states.
“Even after repeated requests, only a few states have reduced the tax. We want to talk to them directly, showcasing how the states which have reduced tax have reaped benefits from increased aviation activity in those airports,” an official said.
Raju recently said the ministry had written to the states on the VAT issue. “One should not tax an economic activity,” he said. The price of jet fuel was recently reduced by 10 per cent, to its lowest level in five years.
The meeting was earlier scheduled for January 4 but got cancelled.
“Even after repeated requests, only a few states have reduced the tax. We want to talk to them directly, showcasing how the states which have reduced tax have reaped benefits from increased aviation activity in those airports,” an official said.
Raju recently said the ministry had written to the states on the VAT issue. “One should not tax an economic activity,” he said. The price of jet fuel was recently reduced by 10 per cent, to its lowest level in five years.
The meeting was earlier scheduled for January 4 but got cancelled.
Fuel costs are currently half the operational expenses of an airline in India. The value added tax (VAT) on ATF ranges from 4% to 30%, depending on sales tax levied by a state.
According to ministry officials, the meeting became necessary after it was decided that that petroleum products will not be brought under the goods and services tax (GST) and even after the implementation of GST will continue to be taxed in similar way by the states and centre.
“The meeting became necessary as even after repeated requests, only a few states have reduced the tax. We want to talk to them directly now showcasing that the states which have reduced tax have reaped benefits from increased aviation activity in those airports,” a ministry official said.