The airline industry has some more reasons to cheer. The finance ministry has agreed to consider lowering the sales tax on aviation turbine fuel and classify it as a declared good.
?I have told the minister for civil aviation that provided he can martial adequate support in Parliament, we will introduce a Bill to that effect,? finance minister P Chidambaram said on Monday at the economic editors? conference. This would ensure that a uniform 4% sales tax would be levied on jet fuel across the country, as against an average sales tax rate of 21%.
A reduction in the rate of sales tax is also expected to lead to lower airfares. While ATF prices have declined significantly in the past month and the government has exempted the fuel from the customs duty, the aviation industry has been pushing for a cut in the sales tax as well. In fact state-run Air India on Monday said it would consider reducing its fuel surcharge to pass on the benefits of a recent decline in jet fuel prices.
The issue was also discussed at a recent meeting of the committee of secretaries. It was decided at the meeting that the law ministry would look into the possibility of introducing a Bill in the Parliament to put ATF into ?declared goods? category. The civil aviation ministry would meanwhile take up the issue of sales tax with the states on one-on-one basis.
While promising to look into duty re-jigs for specific sectors where a fiscal stimulus may help, Chidambaram said he has no intention of re-imposing customs duty on crude oil. The government in June this year had exempted crude oil from customs duty.
The finance minister also said that although the government is expected to forego Rs 31,000 crore this fiscal on account of duty cuts, he is confident that tax collections targets will be met. ?We will achieve our direct tax targets for the year,? he said.
However, he conceded that there is some pressure on indirect taxes, especially excise duty. ?But the Central Board of Excise and Customs has assured me that they will make up for lower collection in excise duty with better collections from customs duty and service tax,? Chidambaram said.
The government hopes to mop up Rs 3,19,940 crore from indirect tax. However due to the slowdown in economic activities, indirect tax collections (excluding service tax) in the month of October shrunk by 5%. Excise duty collections too have registered a negative growth rate since September this fiscal.
Taxing issues
•Sales tax on aviation turbine fuel to be lowered and it will classified as a declared good
•4% sales tax will be levied on jet fuel across the country, as against an average sales tax rate of 21%.
•Meanwhile,Civil aviation ministry will take up the issue of sales tax with the states on one-on-one basis
•No intention of re-imposing customs duty on crude oil
•Will achieve direct tax targets for the year
•The government hopes to mop up Rs 3,19,940 crore from indirect tax this year
•Indirect tax collections in the month of October shrunk by 5%
•Excise duty collections too registered a negative growth rate since September this fiscal