The civil aviation ministry has proposed
slashing of state taxes on jet fuel, which will significantly bring down costs for loss-making carriers that are reeling under a debt of over Rs 2 lakh crore and annual losses of Rs 10,000 crore.
The ministry, in a discussion paper posted on its website, has sought opinion from stakeholders on reducing state taxes on jet fuel to a uniform four per cent.
Different states impose sales tax at varying
rates on aviation turbine fuel, which goes up as high as 35 per cent.
High fuel expenses, contributing to nearly half the costs incurred by airlines, has compounded woes for the sector.
"Reduction in the fuel tax would allow the Indian carriers to become competitive in servicing passengers to their respective hubs within India and compete with international carriers. This advantage would allow them to increase their market share," the paper said.
The ministry has also proposed to abolish service tax on air tickets, which according to the paper, makes air travel "a luxury rather than an efficient mode of transport".
Service tax, including fuel surcharge, is currently Rs 773, or 10.3 per cent of the total fare, whichever is lower, for an economy ticket on international flights.
Courtesy: Mail Today 
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