The Centre on Friday asked the States to consider lowering sales tax on aviation turbine fuel.
Addressing the first national Civil Aviation conference, the Minister of Civil Aviation, Mr Praful Patel pointed out that there were at least six States Andhra Pradesh, Goa, Delhi, Kerala, West Bengal and Tamil Nadu where the incidence of tax is very high.
These States should do something to lower the taxes as the volume of passenger traffic has grown, the Minister said. Any downward revision in sales tax rates on ATF prices would benefit airlines as it accounts for between 40 and 45 per cent of their operating costs. The sales tax on ATF varies from 4 to 34 per cent across the country.
Later speaking to the media on the sidelines of the conference, a senior Kerala government official said that State Government could reduce the sales tax on ATF shortly. We could look at a marginal reduction of 2-3 per cent in sales tax on ATF. No decision has been taken yet. A decision may be taken in the Budget, the official said. An Andhra Pradesh government official added that the Chief Minister was looking into the matter.
The Union Minister also indicated that the Government had no immediate plans to do away with the route dispersal guidelines for national airlines.
The guidelines ensure that airlines do not operate only between the profit making metro routes but also extend air connectivity to other parts of the country.