Govt defers plan to impose 2 per cent levy on air tickets from January 1

The government has deferred its plan to impose two per cent levy on domestic and international air tickets from January 1 next year as the Draft Aviation Policy is expected to go for Cabinet approval only around mid-January.

The Ministry is preparing the draft note for the Cabinet at present, which is likely to be ready by December 25, following which it will be sent for inter-ministerial comments, Civil Aviation Ministry sources said today.

The Government in the revised draft policy, unveiled on October 30, has proposed 2 per cent levy on all domestic and international air tickets to raise funds for boosting regional air connectivity.

The proposal earlier was to come into effect from January 1.

"As per procedure, various ministries concerned including Finance, Home, Defence, Law, MEA among others will be given 15 days time for their comments," they said.

"In all likelihood, the draft note will be sent to the Cabinet for its approval around January 15 next year," they said, adding that the proposed levy is part of draft policy and hence it can't be implemented without Cabinet approval.

In the draft policy, the Civil Aviation Ministry had proposed a raft of measures to bolster regional air connectivity, including by way of levying additional cess and providing viability gap funding.

"RCF (Regional Connectivity Fund) will be funded by a levy of 2 per cent on all domestic and international tickets from January 1, 2016 onwards under...The Aircraft Act 1934. The RCF levy will be applied on all routes other than Cat IIA routes and RCS routes," according to the draft policy.

The government expects to mop up about Rs 1,500 crore annually from imposition of the levy.