The government has requested states to cut value added tax (VAT) on jet fuel prices to offer a breather to the harassed Aviation industry. Relieving the airline sector, VAT on jet fuel is reduced to 4%.
Together, airlines in the country have recently posted about Rs 10,000 Crores in losses for the 2012-2013 fiscal year. Presently, jet fuel is charged with a VAT between 4 and 30%. Most of the losses were attributed to the high fuel prices, leading to nearly 50% losses. The airlines are also in a combined Rs 90,000 Crore debt.
Civil Aviation Minister Ajit Singh was quoted by India today as saying that the aviation turbine fuel (ATF) prices were high due to rising base price and "very high VAT imposed by state governments."
Tax was reduced recently in Chhattisgarh, Jharkhand, Madhya Pradesh and West Bengal and the Minister is hoping other states would also follow suit. Singh added that airlines would have more customers if VAT is lowered, therefore directly helping the economy.