States will not cut sales tax on ATF

In a blow to the beleaguered aviation industry, states have decided not to review the current sales tax rates on jet fuel. "The states are in no mood to review the (sales tax) rates on ATF," Asim Dasgupta, chairman of the empowered committee of state finance ministers, said here on Saturday. States also do not want the Centre to bring ATF in the declared goods category, a move that will be binding on them to levy a uniform 4% sales tax on the commodity.

Dasgupta added that states had asked the Centre certain questions on aviation turbine fuel (ATF) and petroleum pricing but not received any response so far.

Sales tax on ATF varies widely among states. The aviation industry is demanding a cut in the sales tax rates on jet fuel which constitute 40% of their operation costs as against 20%-25% globally. In fact, the Centre recently formed an empowered group of ministers to study the impact of jet fuel prices on the aviation industry.

Until now, only three states have reduced sales tax on ATF to 4%-Andhra Pradesh, Rajasthan and Maharashtra (barring Mumbai and Pune)-while the sales tax on ATF is zero in Andaman and Nicobar.