States refuse to budge on jet fuel sales tax
Domestic airline companies, facing a financial crunch, may not see a reduction in sales tax rates charged by states on jet fuel soon
By ET Bureau |
NEW DELHI: Domestic airline companies, facing a financial crunch, may not see a reduction in sales tax rates charged by states on jet fuel soon, Asim Dasgupta, finance minister of West Bengal and chairman of the empowered committee of state finance ministers, said.
���The mood of the states is not to review sales tax rates on ATF (aviation turbine fuel).... States have full consensus on the issue,��� Mr Dasgupta said while briefing reporters after a meeting of the empowered committee here on Saturday.
States are also opposed to the commodity being given a special status (called declared goods status) that will set a uniform 4% state-level tax on the commodity across the country. At present, sales tax on ATF varies between 12% and 35% from state to state. The proposed move will mean substantial revenue loss to states. States collect over Rs 2,500 crore every year on account of sales tax on ATF.
The civil aviation ministry and airline companies had sought the inclusion of ATF in the special category list to save airlines. A uniform sales tax rate of 4% would make jet fuel substantially cheaper . Jet fuel constitutes 40% of an airline���s operational cost.
States are also reluctant to reduce sales tax on ATF as they are apprehensive that airlines would not pass the benefit to the customer. The empowered committee had asked the civil aviation ministry to clearly explain if flying cost for consumers would come down if sales tax rate is reduced.
States had sought certain details from the Centre on ATF, but had not received any response so far, Mr Dasgupta said. The panel also discussed broad contours of the proposed goods and services tax (GST), he said.
He said the list of items which would be taxed under the new regime and rate of taxation would be finalised by September. The meeting discussed crucial aspects of the architecture such as the exemption list but states have not yet reached consensus on it so far, a government official, who attended the meeting said.
���The mood of the states is not to review sales tax rates on ATF (aviation turbine fuel).... States have full consensus on the issue,��� Mr Dasgupta said while briefing reporters after a meeting of the empowered committee here on Saturday.
States are also opposed to the commodity being given a special status (called declared goods status) that will set a uniform 4% state-level tax on the commodity across the country. At present, sales tax on ATF varies between 12% and 35% from state to state. The proposed move will mean substantial revenue loss to states. States collect over Rs 2,500 crore every year on account of sales tax on ATF.
The civil aviation ministry and airline companies had sought the inclusion of ATF in the special category list to save airlines. A uniform sales tax rate of 4% would make jet fuel substantially cheaper . Jet fuel constitutes 40% of an airline���s operational cost.
States are also reluctant to reduce sales tax on ATF as they are apprehensive that airlines would not pass the benefit to the customer. The empowered committee had asked the civil aviation ministry to clearly explain if flying cost for consumers would come down if sales tax rate is reduced.
States had sought certain details from the Centre on ATF, but had not received any response so far, Mr Dasgupta said. The panel also discussed broad contours of the proposed goods and services tax (GST), he said.
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Mr Dasgupta said the meeting discussed the items which have to be covered under GST, but did not disclose the list of items. He said the list of items which would be taxed under the new regime and rate of taxation would be finalised by September. The meeting discussed crucial aspects of the architecture such as the exemption list but states have not yet reached consensus on it so far, a government official, who attended the meeting said.
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