Centre requests state governments to reduce VAT on jet fuel

The central government has requested state governments to reduce value added tax (VAT) on jet fuel to provide relief to the aviation sector, which is suffering due to the high cost of fuel.

Minister of State for Civil Aviation Mahesh Sharma on Thursday said jet fuel constitutes about 40-50 per cent of the operational cost of an airline and that the finance ministry had been requested that jet fuel be included under declared goods.

"Government is concerned over the jet fuel costs. We have requested state governments to rationalise the taxes on jet fuels," Sharma said at the Economic Times Aviation Focus Annual Summit in the national capital.

Currently, ATF (aviation turbine fuel) sold in the country is nearly 50-60 per cent costlier than in overseas markets like Bangkok, Singapore or Dubai as an additional 4-34 per cent state sales tax hikes the price.

According to the minister, the finance ministry has been requested to streamline taxes imposed on the maintenance, repair and overhaul (MRO) industry as well.

The minister said that this step has been taken to promote the domestic MRO industry. This, he said, will allow the domestic passenger carriers to service their aircraft in India rather then sending them abroad.

Sharma added that his ministry will shortly constitute an independent advisory group consisting of all the stakeholders who will be able to advise and guide the ministry in framing industry friendly policies.