Ajit Singh to raise tax issue with petroleum, finance ministries

June 6th, 2012 - 9:09 pm ICT by IANS  

New Delhi, June 6 (IANS) Civil Aviation Minister Ajit Singh Wednesday said he will raise the issues of rationalising state sales tax on jet fuel and service tax on tickets with the petroleum and finance ministries.

“India is amongst the few countries in the world that levy service tax on air tickets. Levying of this tax has hampered recovery of air traffic growth and profitability in Indian aviation industry,” Singh told reporters here.

According to Singh, service tax for 2012-13 on air transport of passengers has been increased by four times and is levied upon 40 percent of gross ticket value.

“The increase in the service tax would make the air travel costlier. This would definitely spell more trouble for the airline companies which are already reeling under tremendous stress, due to existing unviable operating environment,” Singh said.

“I have requested finance minister to revert back to the earlier rate of service tax on domestic as well as international tickets.”

On the high jet fuel cost due to addition of state sales tax which ranges from 3 to 30 percent, Singh revealed several recommendations made by an expert agency commissioned by his ministry on the ATF prices.

“Expert report has recommended a slew of reforms to promote competition and bring in transparency. These include bringing air turbine fuel (ATF) under ‘declared goods’ category that attract uniform lower rate of VAT (value added tax), switch to specific rate of duty instead of ad valorem taxation of ATF.”

Expert group has also recommended that the petroleum ministry bring ATF under Petroleum and Natural Gas Regulatory Board’s (PNGRB) scope by notifying the product so that PNGRB can take action to protect users.

Singh is expected to meet Petroleum Minister S. Jaipal Reddy to discuss the issue.

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