State now levies lower tax only at smaller airports

The Maharashtra Government is mulling to reduce sales tax on aviation fuel to bring it at par with other hubs like Delhi, Chief Minister Prithviraj Chavan has said.

The State is currently working on a proposal to lower sales tax on jet fuel and an announcement on the issue may be made soon, he said.

“We need to reduce tax on aviation turbine fuel to at least to what other major destinations like Delhi (have)...I will be able to give you good news on that very soon,” Chavan said at a function here over the weekend.

Jet fuel constitutes almost half of an airline’s operating costs, compared to 20-25 per cent globally, due to high taxes on ATF levied by different states — ranging from four to 30 per cent.

Chavan said that Civil Aviation minister Ajit Singh has “convinced” the State Government about the need to bring down tax on ATF.

“We had a meeting with Ajit Singhji where he was able to convince that if we bring the ATF taxes down, there would be more flights coming to Mumbai to get their fuel loaded,” Chavan said.

Smaller Airports attract lower tax

Maharashtra currently follows a policy of levying lower tax on ATF at only smaller airports but it “has not really worked”, he said.

Meanwhile, Ajit Singh, who was in the city on Saturday to attend the 28th annual convention of the Indian Tour Operators Association, said that Maharashtra needs to cut taxes if it wanted to attract more air traffic.

“Last time, during my meeting with the Chief Minister, I told him that there is a difference of five per cent in sales tax on ATF in Mumbai and Delhi. While Delhi has 20 per cent sales tax on ATF, Mumbai levies 25 per cent and thus the number of airlines refuelling their planes in Delhi now is twice as much as in Mumbai and Delhi will soon overtake Mumbai as far as civil aviation goes,” Singh said.

(This article was published on September 2, 2012)
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