States not to lower sales tax on ATF; airlines' hopes dashed | business | Hindustan Times
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States not to lower sales tax on ATF; airlines' hopes dashed

business Updated: Aug 22, 2009 19:20 IST

States today refused to lower sales tax rates on jet fuel, cost of which accounts for over 40 per cent of the total operational cost of airlines and is the foremost issue facing the aviation industry, beset with host of other problems.

West Bengal Finance Minister and VAT panel Chairman Asim Dasgupta also said states are opposed to bringing ATF under the declared goods category, as demanded by airlines. If ATF brought under declared goods, no state would be able to impose more than four per cent sales tax on jet fuel.

The sales tax rates, which vary from state to state, range from a mere four per cent in Andhra Pradesh to over 30 per cent in several other states.

"The mood of states is not to review the (sales tax) rates of ATF now, because we asked some hard data on policy of fixation of pricing of petroleum products. We have not got the response," Dasgupta told reporters after the panel met on Goods and Services Tax.

States' stand on sales tax rate on ATF comes nearly 10 days after a ministerial group has been set up to study the impact of ATF prices on the aviation industry and recommend steps to bring down the operational cost of airlines.

The VAT panel had earlier asked the Centre a host of questions like how ATF prices are fixed, what is the share of ATF in total costs of running an airline and so on, but has not got any respose so far.