Parliament okays bill on tax exemption on ATF

NEW DELHI: Parliament on Thursday passed a bill to exempt foreign aircraft from paying taxes on Aviation Turbine Fuel and lubricants.
The government said it has started consultations with states on rationalisation of taxes on these items with a view to make air travel cheaper.
Replying to a debate on the Aircraft (Exemption from Taxes and Duties on Fuel and Lubricants) Bill, 2000, Civil Aviation Minister Shahnawaz Hussain said domestic air travel in India was costlier than travelling to Dubai or Bangkok, primarily due to high taxation on ATF but declined to assure the House that states would be reimbursed for the losses incurred after the passage of this bill.
Referring to his discussions with some state governments, he said while Andhra Pradesh had taken the lead in drastically slashing sales tax on ATF to four per cent, the prevailing rates in all other states stood between 20 and 39 per cent.
The cost on ATF comprised about 30 per cent of total air travel cost for international and 22 per cent for domestic sectors, Hussain said.
In keeping with obligations of International Civil Aviation Organisation resolution of 1993, the bill provides for exemption of fuel and lubricants taken by foreign planes.
The Centre was earlier paying subsidy to the states on exempting foreign carriers from levy of sales tax on ATF and later continued to subsidise it from the oil pool account which now has a big deficit, the Minister said.