Relief to airlines: Karnataka government slashes tax on Aviation Turbine Fuel from January 1
The government’s decision to reduce the price of ATF should help airlines operating out of Bengaluru airport.
FollowIn a big relief to airlines, the Karnataka government has reduced value added tax (VAT) on aviation turbine fuel from the existing 28% to 18% with effect from January 1, 2022. A notification to this effect was issued by the Ministry of Finances.
It comes a week after the Indian Oil Corporation (IOC) slashed ATF prices. The government’s decision to reduce the price of ATF should help airlines operating out of Bengaluru airport. While seven states have reduced VAT to under 4 per cent. Karnataka’s move is significant as Bangalore airport is the third busiest in the country and main operating base for airlines.
Union Civil Aviation Minister Jyotiraditya Scindia had recently urged 22 state governments to reduce the VAT to a range of 1-4% and thus give an impetus to the struggling aviation industry. “The price of ATF is a major component of the operating cost of airlines. With that, the tax on ATF contributes significantly to the ATF price,” the Ministry had said.
Currently, Karnataka levies three kinds of rates on ATF. While the tax is 1% for flights under the Regional Connectivity Scheme, airplanes weighing under 40,000 kg are levied 5% and all other aircraft are under the 28% tax category.
Jet fuel or aviation turbine fuel is a type of aviation fuel designed for use in aircraft powered by gas-turbine engines. It is colourless to straw-colored in appearance. The most commonly used fuels for commercial aviation are Jet A and Jet A-1, which are produced to a standardized international specification.
