Civil Aviation Minister Jyotiraditya Scindia on Wednesday urged the state governments to rationalise VAT on Aviation Turbine Fuel (ATF) across all airports within the range of 1 per cent to 4 per cent.
Writing to 22 states and Union Territories, Scindia asked them to take forward the common intention to boost air travel and connectivity in states with a view to accelerate economic development.
Notably, the price of ATF is a major component of the operating cost of airlines. State levy on ATF significantly increases its price.
"Citing examples of progressive states such as Kerala, Andhra Pradesh, Meghalaya, Nagaland, Sikkim and Telangana, the minister wrote that they have brought down the VAT to 1 per cent and even below," the Civil Aviation Ministry in a statement.
"As a result, they have seen a substantial jump in the number of aircraft movements in their states," it added.
Besides, the minister reminded the state goverments that air connectivity directly promotes tourism growth, output growth and employment generation, in addition to various indirect benefits to the economy.
The sector has a high output multiplier of 3.25 and an employment multiplier of 6.1.
"Presently, there is a huge disparity between the states, and even within the states, in terms of VAT being levied on ATF," the statement said.
