Jyotiraditya Scindia, the Minister of Civil Aviation has written to 22 states and union territories to rationalise the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF).
Jyotiraditya Scindia has asked for VAT to be rationalised within the range of 1 per cent to 4 per cent.
The rate of ATF is a major component of the operating cost of airlines with that and the tax on ATF contributes significantly to the ATF rate.
He noted that addressing this issue would validate a force multiplier effect with regard to air connectivity in states.
The Minister said that rationalization of VAT will give a stimulus to air travel, that will further have a large effect with regard to air connectivity and economic development.
Scindia had cited examples of states such as Kerala that has brought down VAT on ATF from 25 per cent to 1 per cent.
Thereafter, the number of aircraft movements at Thiruvananthapuram airport had surged from 21,516 flights to 23,566 flights in a span of 6 months
The Civil Aviation Minister noted that many other states such as Andhra Pradesh, Nagaland, Orissa, Punjab, Sikkim and Chattisgarh have followed suit.
Scindia highlighted on the need to reduce the existing VAT or Sales Tax on ATF to 1per cent - 4 per cent at all airports with immediate effect.
The 22 states and union territories to which Scindia wrote includes Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Maharashtra, Madhya Pradesh, Mizoram, Rajasthan, Uttarakhand, Uttar Pradesh, Jammu & Kashmir, National Capital Territory of Delhi, Andaman Nicobar, and Dadra and Nagar Haveli, Daman & Diu, Tamil Nadu, Tripura and Ladakh.