T.N. government contemplates reducing VAT rate on aviation turbine fuel
The Tamil Nadu government is considering a reduction in the Value Added Tax (VAT) on Aviation Turbine Fuel to align with neighboring states. This move aims to lower operating costs for airlines following pressure from the Union government.
Why it matters
Tax rationalization on aviation fuel is a significant factor in airline profitability and regional air connectivity.
The Tamilaga Vettri Kazhagam (TVK)-led government is contemplating lowering the State-level Value Added Tax on Aviation Turbine Fuel (ATF).
At present, the tax rate is 29%. “We want to make it on a par with that of neighbouring States,” says an official. It is expected that the actual rate will be made public when the State budget is presented.
According to information furnished by the Union Ministry of Petroleum and Natural Gas four months back to the Lok Sabha, Andhra Pradesh charges 1%; Puducherry - 14.5%; Telengana - 16% and Karnataka - 18%. As for Kerala, sales tax rate is 5% along with cess of 1% on tax, besides each of the four airports in the State, including Thiruvananthapuram, Nedumbassery, Kannur and Kozhikode, charges one per cent tax and one per cent cess.
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