Domestic airlines approach Maharashtra to rationalise ATF sales tax
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Led by Vijay Mallya, Chairman of Kingfisher Airlines, the domestic aviation industry has approached the Maharashtra State Government to rationalise the sales tax on Aviation Turbine Fuel (ATF). The Hindu said this came after the aviation industry failed in its efforts to get ATF included in the ambit of Goods and Services Tax. Aviation industry body, Federation of Indian Airlines (FIA), which also represents Kingfisher Airlines, has now decided to go to states individually asking them to ease the sales tax on ATF, the report said. Maharashtra is the first state to be approached by the FIA. The association has asked the State Government to change the sales tax structure from 25% ad valorem to a fixed tax rate corresponding to ATF prices benchmarked at INR 30/litre. Ad valorem is a tax based on the quantity of sale. According to the report, the FIA claimed that a rationalisation of ATF sales tax in the state would see more aircraft re-fuelling in the state, thereby giving the state more volumes of sales. A change in the tax structure would ease the tax burden on airlines which forms 35-40% of the cost component for airlines. The rate of sales tax on ATF in Maharashtra is one of the highest in states across India. In Delhi, sales tax on ATF stands at 20%, while in Gujarat it is at 30% and in Andhra Pradesh the sales tax on ATF stands at 16%, according to the report. Kingfisher pays up Mumbai airportKingfisher Airlines averted a major showdown with the Mumbai International Airport (MIAL), which had threatened to ban its operations over a payment default, by clearing the dues towards airport charges. “We have received a cheque payment for Rs 105.71 crore and with that the issues regarding payment default has been resolved. The airline can operate normally from our airport,” Mumbai International Airport President Rajiv Jain told PTI. The MIAL had earlier this month threatened to prevent the carrier from operating out of its premises from last weekend if it did not clear the said dues.
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