The Aviation Ministry believes that Delhi’s Indira Gandhi International Airport could lose air traffic to the upcoming Jewar International Airport in Greater Noida, Uttar Pradesh. According to reports, Civil Aviation Minister Rammohan Naidu Kinjarapu has written a letter to Delhi’s Chief Minister Rekha Gupta, sharing his concerns on this issue.
Cut Tax On Aviation Fuel: Centre To Delhi
In the letter dated March 19, the Aviation Minister has reportedly urged the Delhi government to reduce taxes on Aviation Turbine fuel or ATF. Delhi currently levies 25 per cent value added tax on jet fuel. The Aviation Minister has warned that if the National Capital doesn’t bring it down to one to four per cent, then air traffic could get diverted to the soon-to-be operational Greater Noida airport. This as in Uttar Pradesh VAT on jet fuel is currently at just one per cent.
Aviation Minister’s Letter
In his letter which has been accessed by various media outlets, Aviation Minister Rammohan Naidu Kinjarapu wrote, “Currently, 25 states/UTs have reduced VAT on ATF to around 1%-4%, signalling their interest in attracting air connectivity to their states. Delhi continues to be one of the few states/UTs with a high rate of 25% VAT on ATF for general flights, which needs to be rationalised to align with other states, i.e., in the range of 1%-4%.”
Competing With Foreign Carriers
The Aviation Minister also highlighted the significance of lower VAT rates in making India’s airlines more competitive. He wrote, “The price of ATF is a major component of the operating cost of airlines, and the tax on ATF significantly contributes to the ATF price. The Ministry of Civil Aviation has been emphasising the need for the Goods and Services Tax (GST) Council to consider bringing Aviation Turbine Fuel (ATF) within the ambit of GST at the earliest. For the continuing financial health of domestic airlines, it is important to eliminate the tax disadvantage faced by them compared to competing foreign carriers.”
