Civil Aviation ministry lobbies for 4%tax on ATF in all states
July, 23rd 2008
The civil aviation ministry is vigorously pursuing with the finance ministry for pegging taxes on aviation turbine fuel at four per cent in every state so that relief could be provided to both airlines and passengers from increasing operating costs and fares.
"We have taken the issue very seriously. We are making all out efforts to get relief on levies imposed on ATF," a highly-placed source in the civil aviation ministry said.
At present, the ATF price for domestic airlines include customs duty of 10 per cent and excise duty of eight per cent, while different states levy sales tax ranging between 20 per cent and 30 per cent.
"We hope that the finance ministry will do something on our plea regarding the ATF taxes," sources said.
The price of ATF has more than doubled in the last three years. While in April 2007-08, the basic ATF rate was Rs 30,124.17 K/L, now it is Rs 69,097.19 per K/L now.
In May last, the civil aviation ministry wrote a letter to the finance ministry requesting reduction in customs and excise duties, besides sending a separate letter to state governments to consider a uniform sales tax of four per cent on ATF.
ATF accounts for 40 per cent of the operating costs of Indian carriers against 20 per cent for international carriers. ATF in India is priced 70 per cent higher compared to the international benchmark.
Andhra Pradesh and Kerala have reduced the sales tax on ATF to four per cent and the Rajasthan government has reduced the tax rate in specific cases.