Minister for Civil Aviation Jyotiraditya Scindia on Thursday thanked the governments of Uttarakhand and Andaman and Nicobar for lowering VAT (value-added tax) on aviation turbine fuel.
Uttarakhand has brought down the VAT to 2%, while Andaman and Nicobar have brought it down to 1%, Mr. Scindia said.
“My heartfelt thanks to both these governments because it is only by decreasing the volume of taxes that you are going to increase the volume of connectivity going into those States. Considering that fuel is 37.5% of operational costs of an airline, it is very important that we put an impetus on greater connectivity by bringing down the cost structure [of fuel],” said the Minister at an event organised by the PHD Chamber of Commerce and Industry.
Last month, Mr. Scindia had written to 22 States and Union Territories appealing to them to reduce VAT to 1% to 4%. Kerala, Andhra Pradesh, Meghalaya, Nagaland, Sikkim and Telangana are some of the States that have already lowered it.
The Ministry of Civil Aviation has also proposed to the Ministry of Finance to bring ATF under GST, and the matter is pending with the GST Council.
