High jet fuel tax harming air travels, Jyotiraditya Scindia tells states

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By Sanjay Singh

New Delhi, October 18: Union Civil Aviation Minister Jyotiraditya Scindia has called for reducing tax on Aviation Turbine Fuel (ATF) or jet fuel, stating that there is a huge demand for air travel after the pandemic and that this would further impact the growth and financially burden airlines.

The minister urged eight states and Union Territories namely Delhi, Goa, Assam, Rajasthan, Bihar, Tamil Nadu, Maharashtra and West Bengal to reduce the VAT on Aviation Turbine Fuel (ATF). Tax on jet fuel accounts for around 40 per cent of airlines operational costs.

Scindia was speaking at the Conference of the Secretaries of Civil Aviation, organised by the Ministry of Civil Aviation. The conference was organised to boost the development in the sector by promoting collaboration between the Centre and states

Scindia said air traffic growth will be driven by smaller cities and domestic air traffic is inching closer to pre-Covid level and in recent times, the daily passenger numbers crossed the four lakh mark twice.

Scindia said that Value Added Tax (VAT) on jet fuel is still high in eight states and Union Territories in the range of 20-30 per cent and urged them to reduce the rate. “’New growth to come from Tier 2 and 3 cities,” he said and emphasised the need to bring down entry barriers in the context of high VAT on jet fuel in some states.

Currently, 28 states and Union Territories have VAT on jet fuel in the range of 1-4 per cent. Rajiv Bansal, secretary, Ministry of Civil Aviation, said there has been a lot of progress in the last year.

Domestic air traffic is almost near to the pre-Covid level, multiple new airports have been inaugurated, and new routes have been launched, policy steps to promote drone, Helicopter Medical Emergency Services and Fractional Ownership have been initiated. Bansal too urged states to reduce VAT on ATF and hailed other states who have already done it.

Subjects of Infrastructure support such as the extent of land requirement for different types of airports, pending cases of handing over of land, Taxation related issues such as VAT, tax incentives for promoting Maintenance Repair and Overhauling.

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