Reduce VAT, sales tax on aviation fuel: Dakshina Kannada commerce body tells CM Bommai

The Kanara Chamber of Commerce and Industry has appealed to Chief Minister Basavaraj Bommai to reduce the VAT, Sales Tax on Aviation Turbine Fuel (ATF) from 28 per cent to 1 per cent

In a representation to the CM, KCCI President Isaac Vas said that Mangaluru International Airport has been serving the people of Coastal Karnataka and Malnad region and also the State of Kerala up to Kanhangad. Reports indicate an uptick in the passenger movement at the airport this month, after the long standing Covid-induced restrictions. This augurs well for the local economy.

With the opening of airports nearby, a lot of concessions have been given to different airlines in their respective states to start operating from those airports, thus ensuring more airline operations and maximum passenger traffic.

As far as the tax on Aviation Turbine Fuel (ATF) is concerned, it is subsidised to as low as 1 per cent in Kerala while it is as high as 28 per cent in Mangaluru making it unattractive for new airlines to come and start their operations to various destination, he said.

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The KCCI has been advocating to rationalise/reduce VAT on ATF in Karnataka for a long time. In fact, Union Minister for Civil Aviation, Jyotiraditya Scindia, in his letter to the CM recently urged him to rationalise/reduce the VAT/Sales Tax on ATF to bring it on par with neighbouring states.

In his letter, Scindia said “Presently, there is a huge disparity between States, and even within States, in terms of VAT being levied on ATF.

He had emphasised on the need to reduce the existing VAT/Sales Tax on ATF to 1 per cent-4 per cent at all airports with immediate effect.

Besides, it is worth noting that the revenue collected by the State on account of VAT on ATF is an insignificant proportion of the overall State finances. In any case, this will be more than offset by the positive impact of air connectivity to the State through the flow of economic activities,” the letter said quoting Scindia.

Further, the KCCI President also urged the government to expedite the work on the acquisition of 36 acres of land for enhancing the runway for Mangaluru International Airport which is still pending. The extension of the runway will help in the overall development of the airport.