Govt defers plan to impose 2% levy on air tickets from Jan 1

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Published: December 17, 2015 4:15:45 PM

The draft policy unveiled by the Ministry on October 30 planned to impose the 2% levy to raise funds to improve regional air travel infrastructure. The proposal was to come into effect from January 1.

air ticket priceThe draft policy unveiled by the Ministry on October 30 planned to impose the 2% levy to raise funds to improve regional air travel infrastructure. The proposal was to come into effect from January 1. (Reuters)

The plan to impose two per cent levy on most domestic and international air tickets from January one that will make air travel a little more expensive has been deferred by the government.

The reason cited by the Civil Aviation Ministry was that the Draft Aviation Policy containing the proposal is expected to come before the Cabinet for approval only in the middle of next month.

The draft policy unveiled by the Ministry on October 30 planned to impose the 2 per cent levy to raise funds to improve regional air travel infrastructure. The proposal was to come into effect from January one.

The Civil Aviation Ministry is preparing the draft note for the Cabinet at present, which is likely to be ready by December 25, following which it will be sent for inter-ministerial comments, Ministry sources said today.

“As per procedure, various ministries concerned including Finance, Home, Defence, Law, MEA among others will be given 15 days time for their comments,” they said.

“In all likelihood, the draft note will be sent to the Cabinet for its approval around January 15 next year,” they said, adding that the proposed levy is part of draft policy and hence it can’t be implemented without Cabinet approval.

In the draft policy, the Civil Aviation Ministry had proposed a raft of measures to bolster regional air connectivity, including by way of levying additional cess and providing viability gap funding.

“RCF (Regional Connectivity Fund) will be funded by a levy of 2 per cent on all domestic and international tickets from January 1, 2016 onwards. The RCF levy will be applied on all routes other than Cat IIA routes and Regional Connectivity Scheme(RCS) routes,” according to the draft policy.

The government expects to mop up about Rs 1,500 crore annually from imposition of the levy.

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