The state government has decided to withdraw the complete waiver of value-added tax (VAT) on air turbine fuel (ATF) in Bagdogra, the second-largest airport
in Bengal

“From now on, VAT at the rate of 12.5 per cent would be charged on ATF. This will increase the state’s revenue,” said a senior state government official.

In August 2013, chief minister Mamata Banerjee had announced that the state would not charge any VAT on ATF. Her announcement made Bagdogra the only airport in the country with zero VAT on the fuel.

“The decision was made to encourage airline companies to introduce flights in Bagdogra. The strategy worked and many airline companies came up with flights, which connect Bagdogra with different destinations of the country as they refilled the aircraft with ATF available at a cheaper rate,” said a retired officer of a private airline.

In due course, the state government extended the waiver, which helped increase flight movements at Bagdogra. According to sources in the Airports Authority of India (AAI), the number of flights, which is above 50, has almost doubled during the past decade. Also, the number of passengers travelling in a year through the airport has crossed the one-million mark.

The cost of a kilolitre of ATF in Bagdogra was ₹79,505 last month. With the imposition of VAT, it has increased to ₹91,333.

Rahul Rustogi, who runs a firm that sells flight tickets in Siliguri, said the change will impact the flight fares. “There are different components, including the fuel cost, based on which the price of a flight ticket is determined. Now that VAT has been introduced in Bagdogra, it will surely increase the fares and impact the inflow of passengers.”

Rustogi pointed out that the Andal airport in Durgapur is now the sole airport in Bengal with zero VAT. “Now, the competitiveness of Bagdogra airport in terms of ATF prices will reduce and airlines might move via Andal where they will get ATF at a cheaper rate. Some airlines have started running flights via Andal to connect Bagdogra.”

Those associated with the tourism industry also sounded perturbed. Over the past few years, several prominent hotel groups have come up with properties in and around Siliguri and the hills.

“These properties draw high-end tourists who travel by flight. Now if there is a rise in flight fares, a section of these tourists might plan trips to other destinations,” said Debasish Chakraborty, general secretary of the Eastern Himalaya Travel & Tour Operators’ Association.

Shankar Ghosh, the BJP MLA of Siliguri, said he would write to Mamata, requesting her to reconsider the decision. “We fear the decision will impede the economic growth of north Bengal. At a time when the expansion work of Bagdogra airport is in progress, such a decision is unfortunate. I would urge the chief minister to explore alternative options to earn the revenue that the state intends to earn by introducing VAT on ATF in Bagdogra,” said Ghosh.

In Calcutta, the VAT has been reduced from 25 per cent to 20 per cent.