States will lose around Rs 2,500 crore in taxes annually on account of the Centre’s decision of to allow domestic airline companies to directly import aviation turbine fuel (ATF).
“The direct import of ATF by aviation companies will cause a revenue loss of Rs 2,500 crore to the states. Although the Centre has protected their revenues,the move will impact revenues of states,” Bihar Deputy Chief Minister Sushil Kumar Modi,who heads a panel of state finance ministers on GST,told reporters here.
Last month,the Centre had allowed debt-laden local airlines to import jet fuel directly,thereby enabling them to avoid sales taxes ranging between four per cent and 30 per cent levied by state governments.
Airlines,almost all of which are losing money,currently buy ATF from domestic refiners like Indian Oil Corp. Though the jet fuel is priced at parity with international rates,the actual cost to airlines is higher because of state sales tax.
Jet fuel price in India exceeds the global average by more than 50 per cent mostly due to local taxes. Some estimates suggest that direct imports could cut fuel costs by up to 20 per cent.