ATF tax -- Air-India to take Rs 72 cr hit

ATF tax -- Air-India to take Rs 72 cr hit
DEV CHATTERJEE

MUMBAI, AUG 9: In an ironical decision, the Cabinet decision to exempt foreign airlines from paying sales tax on aviation turbine fuel (ATF) has not been extended to national carrier Air-India which is taking a hit of Rs 72 crore per annum paying taxes to various State governments.

At present the sales tax on ATF sold to foreign airlines was paid by the oil companies as the foreign airlines have refused to pay the taxes citing international treaties. The foreign airlines owe over Rs 500 crore to oil companies which has now being waived by the Indian government.

But Air-India officials say it will have to continue paying the tax which is already hitting its bottomline. ``We are now the only airline which will pay this tax imposed by the State governments. It's unfair as our cost of operations goes up substantially,'' says a top Air-India official.

Air-India is incurring huge losses and has been earmarked for priority disinvestment by the Union government alongwith domestic carrier Indian Airlines.

Though the airline officials say that they have made various pleas to the government to provide them with a `level playing field', the government has failed to include Air-India in the list.

The Cabinet decision means sales tax on ATF would not be levied at all on the foreign airline and even the oil companies would not have to pay for the sale of the fuel to foreign companies.

The fuel prices in India is already higher than other parts of the world which has resulted in Air-India taking an hit of Rs 200 crore extra in the previous fiscal. ``The rising fuel cost was one of the major contributor to our losses in the last fiscal. If the government rationalises the taxes, the airline will start making profits again,'' officials add.

Foreign airlines exempt from ATF tax
NEW DELHI: THE Union Government has decided to do away with sales tax on aviation turbine fuel (ATF) sold to foreign airlines and bring a bill in Parliament to exclude the fuel for the purpose from the purview of states.

A decision to this effect was taken at the Union Cabinet meeting here yesterday, Parliamentary Affairs Minister Pramod Mahajan said. "The Cabinet approved the introduction of aircraft (exemption from tax and duties on fuel and lubricants) bill 2000 under which the ATF sold to foreign airlines would not come under the purview of sales tax," Mahajan said. The sales tax dues of oil companies have mounted to about Rs 500 crore in the last five years, he said. PTI