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The Civil Aviation Ministry is in talks with the Finance Ministry and States and UTs to bring down excise duties and VAT on Aviation Turbine Fuel as it was affecting the robustness of the sector, Civil Aviation Minister Jyotiraditya Scindia has said.
As a result of interaction with various chief ministers on the need for bringing down taxes, as many as seven States/UTs have already agreed to slash the VAT on ATF over the last two months, Scindia said at the CII Global Economic Policy Summit 2021 on Thursday.
Not only have ATF prices gone up 200 per cent in the last three-four months, but we have a clutch of taxes such as excise duty of 11 per cent VAT of 1-4 per cent, all the way up to 30 per cent. “You cannot have a robust plying civil aviation sector in India with this tax structure,” Scindia said.
Scindia said that since taxation was a vital issue for the health of the aviation industry, he had taken it upon himself to plead the case on excise duty with the Ministry of Finance and on VAT with various State governments.
‘FinMin sensitised’
“On the excise duty front we had a very detailed presentation (before the Finance Ministry) almost a month ago. The Finance Ministry is also sensitised in terms of the adverse impact of this on the civil aviation space,” he said.
On the issue of VAT, the Minister said that the problem could be approached in two ways. One way was the direct one of including VAT as part of GST. But then it would have to go through the entire process of being passed by the GST council and so on, he added.
‘Direct talks’
Scindia said that he had decided to go for the second process, which was a more laborious one, of getting in touch with 22 CMs of States/UTs where the VAT on ATF was more than 5 per cent, to request them to lower it to enable more connectivity.
“In the last two months, seven State governments have slashed VAT from 28-30 per cent down to 1-2 per cent. It has been passed in the respective State/UT Cabinet and notifications have been issued. Through this forum, I would like to congratulate them, starting with J&K, Ladakh, Andaman and Nicobar to Uttarakhand, Himachal Pradesh, Haryana and Madhya Pradesh, Scindia said.
Talks are on with other 17 States, he added.
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