The Hindu Business Line : Kerala opposes declared goods status to ATF

Thiruvananthapuram, Dec. 1 The Kerala Government is not in favour of the move by the Union Finance Ministry to accord declared goods status to aviation turbine fuel (ATF).

The proposal is aimed at enabling the domestic airline industry to save on fuel cost. However, it will result in revenue loss to the states, according to the Kerala Finance Minister, Dr Thomas Isaac.

He said here on Monday that if declared goods status was given to ATF through an amendment to the Central Sales Tax Act, states would be able to levy sales tax on the commodity only at the standard rate of four per cent. This would result in a combined annual revenue loss of Rs 3,500 crore to the states as most of them were levying more than four per cent tax on ATF.

Financial crunch

The Minister said that it was unjust on the part of the Centre to deprive the states of their sources of revenue.

States were in the grip of financial difficulties in the wake of mounting expenses and pressure on infrastructure requirements. Besides, the recession had started adversely affecting the revenue receipts of most state governments, the Minister said.

Dr Isaac pointed out that the state governments were in need of more resources at this juncture to extend support to the vulnerable sections of the society through measures such as creation of employment at the lowest levels.

The recession would lead to the State’s share of the Central taxes going down, he added.

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