The Maharashtra government is thinking of an entry tax on aviation turbine fuel (ATF), on its transportation through trucks from ports to storage terminals, in the wake of the Centre's decision to allow airlines to import it directly. The proposal is at a preliminary stage, as the state government is waiting for the final print of the central notification.
During the current financial year, the state government had hoped to mobilise Rs 800 crore through a 25 per cent value-added tax on ATF in Mumbai and Pune, and four per cent in the rest of Maharashtra. It had collected about Rs 600 crore in 2010-11. The government's total VAT collection was Rs 45,000 crore in 2010-11, expected to increase to Rs 50,000 crore by end-March.
Annually, 4.5 million kl of ATF is sold across the country, of which 1.2 mkl is in Mumbai and 1.8 mkl in Delhi. Industry sources say ATF sales in the country grow at six to seven per cent annually. Annual sales tax collections on ATF at the six airports of Delhi, Mumbai, Bangalore, Hyderabad, Kolkata and Chennai is Rs 2,500 crore.
A senior government official, who did not want to be named, told Business Standard: "The issue was discussed internally, as the government will lose VAT of the order of Rs 800 crore annually.” The official clarified there was no final decision in this regard, as several issues needed to be examined.