States may not reduce tax on Jet fuel

Even though the aviation industry is pressing for cut in sales tax on jet fuel, most of the tates are unlikely to provide any relief to the beleagured sector and may stick to their present tax structure.

"States are not likely to help the Aviation Ministry. We will not be giving any additional advantage," a source close to the development said.

The Empowered Committee of States' Finance Ministers on VAT is likely to meet this week in the national capital.

In fact, the matter of providing any relief to the sector with regard to sales tax on aviation turbine fuel (ATF), will not even come up at the meeting, which will discuss contours of new indirect tax system -- Goods and Service Tax.

"There is nothing to discuss on the issue. We are very clear on this (reducing sales tax on ATF)," the source said.

High ATF prices are mainly due of high sales taxes by states.

While Rajasthan, in its budget last month, said it was reducing tax rate on ATF from 28 per cent to 4 per cent, some states charge as much as 30 per cent. Andhra Pradesh slashed rates on jet fuel to 4 per cent last year.

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, before firming up their views in this regard. However, the issue was deferred due to the absence of answers.