Patel hints at lowering ATF tax

Civil Aviation Minister Praful Patel on Tuesday said there was a strong case for lowering the tax on aviation turbine fuel (ATF) as that wou...

Civil Aviation Minister Praful Patel on Tuesday said there was a strong case for lowering the tax on aviation turbine fuel (ATF) as that would spur aviation in the domestic sector.

He hoped that Finance Minister P. Chidambaram would consider this in the days ahead.

For the big hopes that had been built prior to the Budget, the sector received only a minor reprieve with the government deciding to treat ATF as a deemed export item for designated carriers flying abroad.

This will lower the ATF cost but will still be comparatively higher than the rates available at airports outside India as 8 per cent central excise duty will continue to be applicable.

By treating it as a deemed export item, ATF used by carriers for international operations will be extended the benefits enjoyed by an exportable item like doing away with central sales tax.

This, however, will not be applicable on ATF used for domestic operations. The ATF cost now accounts for over one-third of the total cost of an air ticket in the domestic sector.

IA, AI may hive off ground handling through JVs

NEW DELHI

: Meanwhile, Patel said AI and IA proposal for hiving off their ground handling and maintenance, repair and overhaul wings has been cleared and the process should be completed by the end of fiscal 2005. These will now become independent joint ventures. AI and IA have already begun working on their initial public offers and would appoint financial consultants by the end of 2005-06 to expedite the move to infuse equity, he said in reply to questions. The government has already announced infusion of Rs 325 crore equity into IA, linked with its fleet acquisition in the Budget. —PTI