Direct fuel import to hit States’ revenue

Cargo, Default — By on March 20, 2012 at 1:10 pm

Direct import of aviation fuel by private Airlines will cut down the tax revenue of around Rs.2,500 crores to the Government annually. “Although the Centre has protected their revenues, the move will impact revenues of states,” Bihar Deputy Chief Minister Sushil Kumar Modi, who heads a panel of state finance ministers on GST, told reporters. Last month, the Centre had allowed debt-laden local airlines to import jet fuel directly, thereby enabling them to avoid sales taxes ranging between four per cent and 30 % levied by state governments. Airlines, almost all of which are losing money, currently buy ATF from domestic refiners like Indian Oil Corp. Though the jet fuel is priced at parity with international rates, the actual cost to airlines is higher because of state sales tax. Aviation fuel price in India exceeds the global average by more than 50 % mostly due to local taxes. Some estimates suggest that direct imports could cut fuel costs by up to 20 %.

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