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The state commercial tax wing under finance department has given its go-ahead to a proposal to exempt international air carriers from paying value added tax (VAT) on aviation turbine fuel (ATF).
The general administration (GA) department had mooted the waiver of VAT to boost international air connectivity from the Biju Patnaik international airport here. Though the airport got the international tag in October 2013, no global carrier has started its operations yet. Earlier, the state government, through a cabinet decision, had slashed VAT on ATF to five per cent from 20 per cent for giving a fillip to commencing international flight operations.
On the GA department's proposal, the finance department had sought the views from the office of the commissioner of commercial taxes. While suggesting exemption of VAT, the commercial tax wing has clarified that it will not result in revenue loss to the state.
"There will be no loss of revenue as the concession will be availed by carriers for international flights. At present, there are no international flights, hence no revenue from ATF sale to these carriers is being received at present", said a letter from the office of commissioner of commercial taxes. "Exemption of VAT on sale of ATF to international flights at Bhubaneswar airport will help in the growth of tourism and economic activities", it added.
Many global carriers are keen to run their flights to and from the Bhubaneswar airport. Dubai-based flydubai has proposed to operate a daily flight of Boeing 737-800 with 174 seats - 12 business class and 162 economy class seats. Both, flydubai and Air Asia, have submitted schedules to run commercial operations from Bhubaneswar. While flydubai will connect Bhubaneswar to Dubai, Air Asia has offered to run flights between Bhubaneswar and Kuala Lumpur.
Apart from flydubai and Air Asia, Air Arabia and SilkAir have also evinced interest to start operations from Bhubaneswar.
State run carrier Air India has said, it may consider extending the services of its Bhubaneswar-Mumbai flight to Dubai. Besides, talks are on for extension of services of Bhubaneswar-Kolkata Indigo flight to Bangkok.
