Bhopal (Madhya Pradesh): State government’s decision to reduce Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25% to 4% at Bhopal and Indore airports has brought cheers to frequent fliers and businessmen. VAT on ATF was already four percent at Khajuraho, Jabalpur and Gwalior airports.
“This decision of the state government will not only increase air traffic at these airports but also bring down fares. Businessmen from Bhopal and Indore will also benefit in terms of cargo transport,” said Prachi Baluapuri, activist who led ‘Support Bhopal for Connectivity’ campaign in 2018.
“We are the last to reduce VAT. Government can now reach out to new operators to expand or start their operations from Bhopal and Indore airports,” she added.
High VAT on ATF at Bhopal has been an irritant for airlines operating from Bhopal. ATF constitutes over 40% of overall cost of flight and several airlines have been requesting the state government to reduce VAT for a long time.
An official of Bhopal Airport, seeking anonymity, said lowering VAT on aviation fuel will make a strong case to consider starting or expanding operations from Bhopal. Neighbouring states like Chhattisgarh, Andhra Pradesh, Rajasthan and Jharkhand have reaped the benefit of reducing VAT on ATF.
“Government’s decision of reducing VAT will definitely bring down fares and freight of cargo as well. Process of opening a customs office at Bhopal airport is almost complete. This will give a boost to cargo air transport for sure,” said president of Mandideep Industries Association, CB Malpani.
Union Aviation Minister Jyotiraditya Scindia had also batted for reduction of VAT on ATF in the month of September during launch of new Indigo flights from Gwalior. Scindia had then said that he had requested the state government to bring down VAT from one to four percent across the state.
"I have written a letter to all chief ministers in the country to reduce the Value Added Tax (VAT) on ATF (aviation turbine fuel). There are eight-nine states where it is in the range of one to four per cent, and that has resulted in a 15 per cent increase in flights from those states," the minister said.
Scindia had said that he will pursue other companies to start operations from MP if VAT in MP is fixed around one to four percent across the state.
