The Union government on September 10 asked State governments to cut value added tax (VAT) on jet fuel to four per cent and ease a major burden on aviation industry in the country. The move comes as Indian airlines posting a combined loss of about Rs 10,000 crore in 2012-13 and a total debt of almost Rs 90,000 crore.
The Union Civil Aviation Minister Ajit Singh said that the reason for for these losses was high fuel cost which constituted almost 40-50 per cent of an airline’s total costs. He added that the aviation turbine fuel (ATF) prices were high due to rising base price and very high VAT imposed by State governments. Currently, VAT on jet fuel ranges from 4 to 30 per cent.
Ajit Singh said this while addressing the conference of state civil aviation ministers in Delhi recently. Chhattisgarh, Jharkhand, Madhya Pradesh and West Bengal have recently reduced the VAT. He hoped the other states will also followthem.
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