States asked to cut VAT on Aviation Turbine Fuel

A day after the central government cuts excise duty on Aviation Turbine Fuel (ATF), the civil aviation ministry said that they are in talks with state governments to cut VAT on ATF. Since airlines are reluctant to hike fare, the move will benefit passengers. The aviation industry in currently going through a tough phase due to rising fuel prices and depreciating rupee.

The airlines has also been requesting the aviation ministry to bring ATF under GST.

When asked about the package to revive the airlines, civil aviation secretary RN Choubey said, “Package may not come in one go, for example the first one has come already by way of reduction in the excise duty. So we are still working on some other measures. We will request the state government to cut VAT on ATF.”

Choubey said that the effort is on to bring ATF under GST but there is an issue of revenue neutrality.

The central government reduced excise duty on ATF from 14% to 11%. With every state charging VAT on ATF from the range of 5-30%, the cost increases significantly. Tamil Nadu levies 29% state tax while the VAT on ATF in Delhi and Maharasthra is 25%. States like Odisha and Chhattisgarh charges 5% VAT to attract more flights.

On the financial assistance to Air India, Choubey said that by the end of this month something concrete will happen.

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