The Empowered Committee of State Finance Ministers has decided not to cut sales tax on aviation turbine fuel (ATF) until the central government lowers excise and Customs duties on the fuel.
"The empowered committee has decided that there will be no change in the sales tax rate on ATF for the time being. The matter will be reviewed after additional information is received from the central government," said a source.
The committee met in Srinagar yesterday. Arun Mishra, joint secretary in the Ministry of Civil Aviation, gave statistical details about the aviation industry and highlighted the tough times airlines in India are facing due to high oil prices.
The committee, however, sought additional information like the formula used to fix the ATF price. The matter will be reviewed by the committee in its next meeting. Sources said states decided not to change the ATF sales tax rate, which varies from 20 per cent to 30 per cent in most states, unless the Centre changes its tax policy. The Centre levies excise and Customs duties at the rate of 8 per cent and 5 per cent, respectively, on ATF.
The committee also decided to wait and see the impact of the recent increase in air fares by around 15 per cent. Domestic air travel growth rate has already slowed down to single digits in 2008-09 as compared with around 30 per cent last year.