The Gujarat government has reduced the tax on aviation turbine fuel (ATF) by five per cent with effect from Monday midnight, according to an official release. The state government claimed that the decison has been taken in the interest of people.
The reduction comes months after the Government of India asked all state governments to reduce Value Added Tax (VAT) on ATF and rationalise it in the range of one to four per cent.
In Gujarat, the VAT on ATF is as high as 30 per cent and the reduction will lower it to 25 per cent. The state government, however, did not elaborate on how the decision will affect the state exchequer.
An estimated 1.4 lakh kilo litres of ATF is sold to airlines every year in Gujarat. In 2019-20, the state government earned VAT worth Rs 240 crore from ATF alone. The revenues from ATF has fallen and halved post the Covid pandemic lockdown.