In a boost for airlines, the Telangana government today announced steep reduction in value added tax on aircraft fuel to 1 per cent from 16 per cent.
The move will help airlines in bringing down their operational costs of which fuel expenses is a major component.
"I am happy to announce that VAT on aircraft fuel which is currently at 16 per cent in the state of Telangana will be reduced to 1 per cent immediately," Telangana's minister K T Rama Rao said.
Rao, who is the IT and Industries Minister, made the announcement at an event to celebrate the tenth anniversary of the Rajiv Gandhi International Airport here.
As it works on ways to boost air connectivity, the Civil Aviation Ministry has been urging states to reduce VAT on aviation turbine fuel.
Rao also said the state government would start work on airport express connectivity to the Hyderabad airport.
The estimated cost of the project is around Rs 4,650 crore and would be completed in two years.
Currently, the airport has a capacity of around 18 million.
The airport here is operated by GMR Hyderabad International Airport Ltd (GHIAL), a joint venture where GMR Group has 63 per cent stake. Other shareholders are Airports Authority of India (AAI), Telangana government and Malaysia Airports Holdings Berhad.
During the occasion, Telangana Chief Minister K Chandrasekhar Rao laid the foundation stone for expansion works of the airport as well as for the exhibition and convention centre.
Besides, GMR Varalakshmi Foundation, the CSR arm of GMR Group, signed Memorandum of Understanding with Schneider Foundation, Volvo and Jacquar Foundation.
A commemorative stamp and envelope were also released during the occasion.
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