Hoda committee recommends standard VAT rate or 'declared goods' status for ATF
03 Apr 2008
New Delhi: A Planning Commission committee has asked the government to adopt a standard VAT rate of 12.5 per cent in order to bring down the cost of aviation turbine fuel (ATF) in the country.
Spiraling crude oil prices have been pushing the cost of aviation fuel higher, a problem compounded by state governments which have been levying high sales tax.
''The Centre should either bring ATF within the definition of 'declared goods' or states should be persuaded to adopt a standard VAT rate of 12.5 per cent,'' the committee, headed by planning commission member Anwarul Hoda, said in its report .
According to the recommendations made by the committee, sales tax on ATF is as high as 40 per cent in some cases, even as petroleum products remain outside the purview of state VAT. Higher taxes make Indian ATF prices dearer by 60 to 70 per cent compared with competing countries.
''Higher ATF prices is one of the key factors responsible for rising domestic air fares. Hence, it is cheaper for an Indian tourist in north India to go to Malaysia or Thailand than south India,'' the report said.