Union civil aviation minister Jyotiraditya Scindia on Tuesday urged states to reduce the tax on jet fuel as they account for a significant part of an airline’s operational costs.
The Value Added Tax (VAT) on jet fuel is still high in eight states and Union Territories at 20-30 per cent.
The minister requested Goa, Assam, Delhi, Maharashtra, Bengal, Rajasthan, Bihar and Tamil Nadu to reduce VAT on aviation turbine fuel (ATF). He was speaking at the civil aviation ministers’ conference in the national capital.
“New growth to come from Tier 2 and 3 cities,” he said.
“At present, 28 states and Union territories have VAT on jet fuel in the range of 1-4 per cent. Only when you bring down your barriers to entry (tax on ATF), will you be able to proliferate civil aviation activities in your states,” stated Scindia.
“Today, eight states are like islands. Please bring down the VAT on ATF from 20-30 per cent to join the ranks of the other 28 states. And if you do that, it will be our responsibility to increase connectivity to your states,” he added.
The Russian military action in Ukraine and other geopolitical uncertainties had led ATF prices to climb to all-time highs. In the last 18 months, ATF prices increased from Rs 53,000 per kilolitre to rise to almost Rs 1,40,000 lakh per kilolitre.
