Centre asks states to reduce VAT on jet fuel

Visakhapatnam, Jan 12: To provide a boost for the aviation sector, the Centre has asked state governments to reduce the value-added tax on jet fuel, Union Civil Aviation Minister Ashok Gajapathi Raju on Tuesday, Jan 12 said.

The Civil Aviation Ministry has written to state governments asking them to reduce Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) -- which accounts for a significant of an airline's overall operating costs.


Emphasising that one one should not tax an economic activity, Raju said "we have written to the states saying please bring down the VAT".

Andhra Pradesh is reaping the benefits of reducing VAT on jet fuel, he said at the CII's Partnership Summit here. According to him, there is a need to modernise airports as it would help in promoting tourism.

"A country of India's size needs to modernise airports in the east coast and needs to modernise airports in the west coast," he said.

Talking about the tourism potential in Andhra Pradesh, Raju said there are huge opportunities for investors in the sector.

The "first beneficiary" of the Swachh Bharat "will be the tourism sector (of the country)", he noted.

Speaking on the occasion, Essel group Chairman Subhash Chandra said there is a huge potential in the tourism sector and exploiting it would help in eliminating the country's trade deficit.

Leela Venture Ltd Chairman and Managing Director Vivek Nair asked the states to look at some of the regulations hindering the growth of hotel industry.

"There is a big scope for tourism here," Nair said. "On the first day he (Andhra Pradesh Chief Minister Chandrababu Naidu) took office, he asked me to meet him and he said you must bring your hotels over here and today he asked me to increase it to five," Nair added.


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