New Delhi, June 16
States have asked the Central government to provide details on how the price of aviation turbine fuel (ATF) is fixed before they can take a decision on reducing sales tax on jet fuel. Last week, civil aviation minister Praful Patel had urged the states to consider cutting sales tax on jet fuel to help airlines tide over large losses due to rising ATF cost.
Following a meeting with Prime Minister Manmohan Singh and finance minister P. Chidambaram, Patel had said any relief package to the airline industry would depend upon the outcome of the meeting of empowered committee of state finance ministers, scheduled to be held on June 16. He had asked for ATF to be notified as declared goods under the CST Act.
After today's meeting, group's chairman Asim Dasgupta said the issue of reduction in sales tax of jet fuel prices would be discussed at the VAT panel's next meeting in Srinagar after getting full details on price fixation of ATF from the Centre. “We will seek further data from the civil aviation ministry. The issue will be discussed in the meeting between June 21 and 23 in Srinagar,” he said.
The ATF price has gone up from Rs 21,000 per kilo litre in 2004 to more than Rs 70,000 now. In fact, the fuel price has increased by 100 per cent during the past one year. Losses for 2008-09 for the aviation industry have been estimated at Rs 8,000 crore, double of the last fiscal when the sector suffered losses around Rs 4,000 crore, largely due to rise in the ATF price. Airlines are trying their best to curtail costs. However, adding to their problem is also the fact that they cannot pass on the entire burden of fuel price hike to travellers as this would eat into their market share.
