Arunachal Pradesh's Department of Tax & Excise issued a notification on April 10, saying that VAT on Air Turbine Fuel (ATF) has been reduced from 20 percent to 1 percent in the state.
"In exercise of powers conferred under Sub-Section (2) of Section 4 read with Section 104 of the Arunachal Pradesh Goods Tax Act 2005, the Governor of Arunachal Pradesh is hereby, pleased to reduce the rate of tax in respect of Air Turbine Fuel (ATF) for all categories of service from 20 percent to 1 percent," the notification stated, adding that it superseded the earlier August 12, 2017 notification.
Earlier this year, it was reported that the GST Council is likely to deliberate on a formula to get ATF under the ambit of GST.
A likely proposal which can be put forward to the GST Council for their deliberation is to allow 18 percent GST plus VAT or Excise rate acceptable to states, as a proposed levy for Aviation Turbine Fuel, sources had said.
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Last year, Civil Aviation Minister Jyotiraditya Scindia had written to 22 states and Union territories to rationalize VAT on ATF, Moneycontrol.com had reported. He had asked for VAT to be rationalized in the 1 to 4 percent range.
The ATF price is a major component of the airlines' operating cost, he said, adding that tax on ATF contributed significantly to the price of ATF. Addressing this issue will enable a force multiplier effect with regard to air connectivity in states. Rationalization of VAT will give an impetus to air travel, which will further have a multiplier effect with regard to air connectivity and economic development, Scindia had said, as reported by Moneycontrol.com.
Also Read: Tamil Nadu govt forms expert panel to study federal fiscal powers of state related to GST
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