In its bid to attract commercial airlines to operate from here and to run commercial flights to other places in the state, Odisha government today decided to slash the rate of VAT to 5 per cent on aviation turbine fuel (ATF) and aviation gasoline (AVGAS).
The decision in this regard was taken at the cabinet meeting presided over by Chief Minister Naveen Patnaik. The reduction of the VAT and AVGAS to five per cent would be effective for a period of 5 years.
"The cabinet approved a proposal of the general administration department in this regard. The state expected increase in the tax collection after reduction of the rate of VAT," said Chief Secretary J K Mohapatra adding that aviation activities need to improve in the state in view of the significant progress made in the trade and industry sectors.
While elaborating on the existing aviation scenario in the state, Mohapatra said there is only one international connectivity in the state. The general administration department has prepared a prospective Civil Aviation Policy for making air trasnport more affordable and enhancing regional and international air connectivity. Reduction in the rate of VAT on ATF and AVGAS was part of the new aviation policy, he said.
Under the Odisha VAT Act, 2004 AFT like other petroleum products is taxed at a relatively high rate of tax of 20 per cent given their adverse impact on environment. The AVGAS is subjected to levy of tax at the rate of 13.5 per cent. Presently, the state gets an annual revenue of Rs 27 crore from AFT, the chief secretary said.
The state government also expected that reduction in the VAT on the ATF and AVGAS would help boost the prospect of the tourism industry in the state, he said.
Meanwhile, the state government in a meeting with representatives of Indian and foreign airlines, the Airports Authority of India and the Directorate General of Civil Aviation, has announced incentives for operating in Odisha.
