GMR Hyderabad International Airport (GHIAL) has received from the Andhra Pradesh Government VAT (Value added tax) relief on two counts.

While the first order helps the airport company, the other benefits passengers whose purchases from the duty-free shops at the Rajiv Gandhi International Airport at Shamshabad will not attract any VAT.

A one-line Government Order issued early this year had replaced the words valid till December 31, 2008, with December 31, 2009, giving significant VAT relief to GMR.

A top GMR official told Business Line that the total VAT benefit would be about Rs 50 crore for the company.

Acting on an appeal by GMR four years ago, the Government had issued an order in 2005 in the public interest, allowing refund of the tax paid to the sellers by GMR, contractors and sub-contractors.

GMR had argued that though the airport became operational (it began operations in March 2008), it should not be construed that it was fully completed. Satisfied by the argument, the Government had decided to give the relief to the infrastructure company.

The order also gave relief of VAT refunds of all taxes paid for the works contracts.

The original GO was to be invalidated after the completion of the project in March 2008 (the order was to be valid up to December 31, 2007, or till the completion of the project which ever is earlier).

However, the Government extended the validity till December 31, 2008, acting on the GMR appeal.

Even before the order lapses, the GMR reportedly requested the Government to extend the deadline for one more year.

Meanwhile, the Government issued a separate GO, making a new entry to the Schedule-I of the VAT Act. This Schedule comprises a list of 61 goods that do not attract the tax.

This would benefit passengers both at the domestic and international terminals.

The Nuance-Shoppers Stop duo operates duty-free shops in a total area of 2,600 sq mtrs at the airport.