States may not cut tax on ATF

NEW DELHI, JUNE 16 : Prospects of air travel becoming more affordable continue to remain slim, with state governments once again deferring a decision on reducing sales tax on aviation turbine fuel (ATF). States have asked the Centre to provide a detailed explanation on how ATF price is fixed before they can take up the issue. However, informed sources hinted that states were unlikely to take a favourable decision on the matter even then.

“We will discuss the issue (sales tax on ATF) at the value-added tax (VAT) panel’s next meeting in Srinagar on June 21-23 after getting full details of price fixation of ATF from the concerned ministry,” chairman of empowered group of state finance ministers on VAT, Asim Dasgupta, said after the group met today. But sources said that state governments are “not amenable” to losing revenues accruing from taxes on ATF, and are unlikely to give in to the Centre’s demand of reducing it to a uniform three per cent from the current 4 to 33 per cent. “Today, states have conceded to reduce taxes on petrol and diesel and cutting VAT on LUG. So it’s very unlikely that they will also give in to the demand to cut sales tax on ATF since it will really increase their financial burden,” a state finance minister who attended today’s meeting told The Indian Express.

According to the source, states would forego approximately Rs 5,000 crore a year by slashing sales tax on jet fuel. The greatest impact would be felt at metros like Mumbai and Delhi.

“Delhi earns Rs 440 crore a year by imposing a 20 per cent sales tax on ATF. This realization would reduce to just Rs 80 crore if taxes are cut,” a senior Delhi Government official said.

State Sales tax rate (%)

Andhra Pradesh 4

Assam 22

Delhi 20

Gujarat 30

Karnataka 28

Kerala 4

Maha. (Mumbai, Pune) 25

West Bengal 25

Punjab 20

Tamil Nadu 29

Message*	Maximum characters allowed

Name*		Email ID*
Subject*		Country*

TERMS OF USE:
The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).

I agree to the terms of use.