Govt asks states to slash 'value added tax' on jet fuel to 4 pct

Sep 10 2013, 15:36 IST
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Lowering of VAT by Chhattisgarh has led to 'a six-fold increase in ATF uplift' and brought in more flights to Raipur. (AP) Lowering of VAT by Chhattisgarh has led to 'a six-fold increase in ATF uplift' and brought in more flights to Raipur. (AP)
SummaryLowering of VAT by Chhattisgarh has led to 'a six-fold increase in ATF uplift' and brought in more flights to Raipur.

fire safety and rescue machinery and building roads to connect the airports.

The Minister said the states could also provide incentives like minimising property tax of airports and under -writing some seats in the flights for some time.

He said the "flawed perception" that aviation belonged to the elite only has resulted in the sector "bearing the cross of high tax regmies and eliciting less sympathy from policy makers."

In his address, Venugopal spoke of providing last-mile connectivity through general aviation and said the Ministry was considering asking non-scheduled operators to frame rules to enable them connect with larger airlines at the regional hubs in major cities.

He also cautioned that public-private partnership at airports "should not drain the passengers' pockets". He also advised state governments to formulate their own civil aviation plans to encourage business and tourism.

Civil Aviation Secretary K N Shrivastava said 100 towns and cities had been identified for creating of "basic airport infrastructure", among which work at 20 would be taken up soon. He said the bill to create a Civil Aviation Authority was likely to be passed by Parliament in the Winter Session.

Making a case for the state governments to reduce VAT on jet fuel to four per cent, Civil Aviation Ministry Joint Secretary Asok Kumar said the states earned only 0.5 to two per cent of their total revenue on this count.

"Though the reduction of VAT on ATF to four per cent does not amount to a significant loss of revenue to the states, it makes a major impact on the operating costs of airlines and, therefore, on air fares," he said.

Over the base price fixed by oil marketing companies, excise duty worth 8 per cent, education cess of 3 per cent and ad valorem VAT ranging from 0-30 per cent were added, he said.

Kumar said the ATF prices in India were 50-60 per cent more than the competing neighbouring hubs. While ATF per kilolitre cost Rs 49,496 in Bangkok, Rs 48,010 in Singapore and Rs 45,450 in Kuwait, it was Rs 80,317 in Kolkata and Rs 76,312 in Chennai.

The aviation sector contributed two per cent of the GDP directly and as spinoffs and employed 11.5 million people in India, the Ministry official said.

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