FinMin likely to scrap ATF sales tax

Fuel costs constitute around 30 per cent of the operating cost of airlines, and savings for Air-India will be significant. As per estimates, Indian Airlines will save around Rs 60 crore per annum on international flights it operates.

“The finance ministry has communicated to us that the proposal may be taken up as part of the Budget,” a senior government official said. The proposal is being considered to provide a level-playing field to state-owned carriers as foreign airlines are already exempt from paying sales tax on ATF uplifted from the country.

The foreign airlines were exempted from levy of duties and taxes on fuel uplifted from and through India after the aircraft (exemption from taxes duties on fuel and lubricants) Bill was passed in 2000. Sales tax rates vary from state to state – over a range of 4 per cent in Andhra Pradesh to as high as 39 per cent in Kerala.