Civil Aviation Minister Jyotiraditya Scindia has urged the States and Union Territories to rationalize value-added tax, VAT on Aviation Turbine Fuel across all airports within the range of one to four percent.
The price of ATF is a major component of the operating cost of airlines. He has written a letter to 22 States and UTs in this regard. Mr Scindia asked them to take forward common intention to boost air travel and connectivity in the State with a view to accelerate economic development.
Citing examples of progressive states such as Kerala, Andhra Pradesh, Meghalaya, Nagaland, Sikkim and Telangana, the Minister wrote that they have brought down the VAT to one percent and even below. As a result, they have seen a substantial rise in the number of aircraft movements in their states.
He said, the Government of Kerala has brought down VAT on ATF from 25 per cent to one per cent. He said, now the number of aircraft movements at Thiruvananthapuram airport increased from around 21 thousand flights to 23 thousand flights in a span of six months.
The Minister said that air connectivity directly promotes tourism growth, output growth and employment generation, in addition to various indirect benefits to the economy.