Agartala : The Tripura government Friday reduced the value-added tax (VAT) on aviation turbine fuel (ATF) by four percent, a minister here said, following a request from the central government.
“The state government on the request of the central government has reduced the VAT on ATF by four percent. Earlier the VAT on ATF was 22 percent and henceforth it would be 18 percent,” Tripura Information and Finance Minister Bhanulal Saha told reporters.
He said: “The central government recently urged all state governments to rationalise VAT on ATF and resolve issues hindering the growth of aviation in the country.”
The minister said that currently the state government is annually earning Rs.5 crore from VAT on ATF.
“Recently the Jet Airways stopped its operation on the Agartala-Kolkata-Guwahati route because of a higher VAT rate in Tripura,” the minister added.
An official of the Tripura finance department said that the taxes on ATF in India are among the highest in the world and that is considered to be one of the major reasons for the mounting losses of airlines.
“Fuel costs account for as much as 50 percent of the operational expenses of an airline in India. The VAT on ATF ranges from four percent to 30 per cent, depending on the sales tax levied by state governments,” the official added.