The Economic Survey has called for rationalising the tax regime for aviation turbine fuel (ATF).

“There is need to rationalise the tax regime particularly value-added tax on ATF which is in the range of 20-30 per cent in most of the states,” the Survey said. “The high operating cost environment owing to high and rising cost of ATF coupled with rupee depreciation is making operations unviable for carriers in India. Fuel prices for the airlines in the country are higher by at least 40 per cent than in competing hubs in the region such as Singapore, Hong Kong, and Dubai and this needs to be rationalised. The Ministry of Civil Aviation is of the view that ATF should be included under the declared category of goods under the relevant provision of the Central Sales Tax Act so that a uniform levy of 5 per cent is achieved. A high tax regime for aviation in general and ATF in particular will reduce the wider economic benefits available from aviation, resulting in a negative impact on economic growth and overall government revenue bases,” the Survey states batting for rationalisation of ATF prices. The Survey said that out of Rs.65,000 crore investment envisaged at airports during the XII Plan, Rs.50,000 crore is expected from the private sector. However, it noted that domestic passenger traffic and cargo throughput had declined during January-November 2012, to 106 million and 2.03 million tonnes respectively.

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