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CII for scrapping import duty, sales tax on aviation gasoline

Our Bureau

New Delhi , Dec. 12

THE Confederation of Indian Industry (CII) has suggested that the import duty and sales tax on aviation gasoline (AVGAS) be removed to provide the much-needed boost to the Indian aviation industry.

According to CII, the import duty and sales tax on AVGAS has rendered the aviation sector uncompetitive, and the move would greatly benefit the industry. CII added that the high excise duty and the exorbitant sales tax adversely affected the viability of domestic airlines and affordability of air transport. It has recommended that excise and sales duty on aviation turbine fuel (ATF) be brought down; ATF be categorised as a "declared good" under the Central Sales Tax Act so that the sales tax on ATF does not exceed 4 per cent; and excise duty be brought down to 4 per cent.

CII has, however, welcomed the abolition of inland air travel tax (IATT) as suggested by the Naresh Chandra Committee, which was 15 per cent of airfare. Aviation-related taxes and fees such as IATT, foreign travel tax (FTT) and passenger service fee (PSF) might be replaced with a single, lower and sector-specific ad valorem cess of 5 per cent of the actual airfare and the proceeds can be used to subsidise uneconomical, but essential air services, the chamber said in a statement. CII has also welcomed the recommendation of permitting domestic private airlines to provide third party ground handling services, and added that it should be only for Indian nationals.

On the Committee recommendation of the need for interface with other Ministries, CII has said that for implementation of the recommendations and to make them obligatory for the statutory service provider to deliver the desired service, different agencies must be bound tightly by a MoU.

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