Mumbai: With airlines struggling to meet higher fuel bills and keep their operations profitable the representative body of Indian private carriers, the Federation of Indian Airlines, held a meeting with Maharashtra chief minister, Prithviraj Chavan. The delegation presented a strong case for reduction in sales tax on aviation turbine fuel (ATF) in the state.
The delegation , led by business tycoon Vijay Mallya , told Chavan that airlines preferred to refuel in other states due to the higher tax in Maharashtra.
The ATF sales tax in the state is 25%.
Between 2008 and 2010, the state collected Rs178 crore as ATF sales tax. Already a total of Rs44 crore has been collected by way of sales tax from the aviation industry in the period January to March 2011.
While the average per litre ATF price in the period 2005-2007 was Rs29.70, it shot up to Rs34.30 in the period 2008-2010. For the first three months of 2011, the average per litre ATF price stood at Rs42.20.
FIA sources said if the state government lowered tax on ATF, industry players would start refuelling their planes in the state.
Apparently, Chavan responded by saying that any reductions in taxes were bound to impact state revenues so if airline operators were prepared to refuel in bulk within the state the tax could possibly be lowered as the state stood to gain through a rise in volumes.