BENGALURU: To give a boost to the aviation industry, the Civil Aviation Ministry has written to several states which levy a high sales tax on aviation turbine fuel (ATF) to slash them. “The ATF cost accounts for 40 per cent of operational cost of airlines. The big challenge in this is the tax on it. We have now asked states to bring down this tax so that the burden on airlines is reduced,” Pradeep Singh Kharola, aviation secretary, said in Bengaluru on Saturday.
Kharola was delivering
the keynote address during an industry meet in the city in connection with Wings India 2020, an international exhibition and conference on civil aviation, which will be held in Hyderabad in March.
‘Karnataka levies 3 taxes on aviation fuel’
A sales tax or Value Added Tax (VAT) of nearly 30% is levied since it does not come under the purview of GST, which jacks up flight operations for airlines. Apart from this, there is excise duty of 11 per cent levied on jet fuel since October 2018 (down from the previous 14 per cent).Kharola later told TNSE, “The civil aviation minister wrote to the chief ministers of all states which levy a high sales tax two months ago to effect this reduction.”
I S N Prasad, additional chief secretary, finance department, confirmed the receipt of the letter from the Centre. “This is a suggestion made by the aviation minister. It is not binding on states.” Prasad said Karnataka levied three kinds of rates on airline fuel. “It is 1 per cent for flights covered under the Regional Connectivity Scheme, 5 per cent for airplanes weighing below 40,000 kg, while it is 28 per cent for other aircraft.”
Asked if Karnataka was contemplating a reduction in airline fuel tax, Prasad said, “No decision has been taken yet. We can take a call during the next budget. It will depend on our resource position.”
An official said that Tamil Nadu levies up to 29 per cent VAT on ATF on regular flights while it is much lower in case of late night and early morning flights, while Telangana slashed the sales tax on ATF on all flights to 1 per cent in 2018.
The aviation secretary also said the government was working on a policy to bridge the gap between demand and supply when it comes to skilled manpower. “We require around 700 to 800 pilots in India in a year but we produce only 350 pilots annually,” Kharola said. In future, India must be in a position to supply pilots to neighbouring countries in the short run and to developed countries in the long-run, he added.Though India is doing well in short-haul flights, it is virtually stagnant in mid and long-haul flights. “Foreign airlines will take away the market if we don’t penetrate it,” Kharola said.