Declared Goods status for ATF if parties support amendment: Fin. Minister

New Delhi: Faced with a downturn of massive proportions in the airline industry and persistent representations from a proactive ministry of civil aviation, the ministry of finance has now said it is open to the idea of amending the Central Sales Tax Act and grant Aviation Turbine Fuel (ATF) a 'Declared Goods' status.

Such an amendment will ensure that airlines pay a standard 4 per cent sales tax on ATF throughout the country instead of the current State-specific tax provisions that are arbitrarily formulated and levied.

"I have told the minister for civil aviation that if he can marshal support for the Bill in Parliament, we can introduce the amendment in the Central Sales Tax Act," finance minister, P Chidambaram, said at the Economic Editors' Conference here on Monday.

As this is a money bill, it will be considered a confidence vote for the ruling party and so lining up political support maybe necessary. Indications are that the main opposition party, the Bharatiya Janata Party  may extend support, even as the Left Parties oppose.

In introducing such a Bill the Government will need to address the issue of compensation from loss of revenues for States, which are estimated to earn about Rs3,500 crore annually from sales tax on ATF.

Meanwhile, the finance minister said the Government might not have to issue more bonds to the State-owned oil retailing companies in the current financial year, if crude prices should stabilize at the current level. "Under-recoveries have been substantially taken care of by the oil bonds," Chidambaram said.