January 28, 2021
The decision may not go well with the Centre
But given the Centre’s call states to slash VAT on jet fuel, it should not be
increased any further.The AAP government has set a target of Rs 24,000 crore for
the current fiscal year of 2015-16, Rs 5,500 crore more than the approximately
Rs 18,550 crore raised last year. As per the bill, the government can increase
VAT on petroleum and tobacco-related products, such as naptha, spirit, gasoline,
furnace oil, wax (except candle wax), any mixture and combination of above
products, foreign liquor and Indian-made foreign liquor, country liquor,
narcotics, molasses, rectified spirit, lottery tickets, brake fluid, tobacco
gutka, unprocessed tobacco, bidis and tobacco used in making bidis and hookah
tobacco, aerated drinks and watches costing above Rs 5,000, without convening a
special Assembly session. The source said that the decision on VAT hike was
reportedly taken in the light of poor VAT revenue collected from ATF, which went
down significantly since the beginning of this year because of a massive decline
in global oil prices. About 62,000 lakh kilolitres of jet fuel is reportedly
consumed in Delhi every month for domestic flights.Being the national capital,
the city’s domestic airport serves as the origin as well as the transit point to
hundreds of flights every day and many aircraft refill their jet fuel from here.
The decision may not go well with the Centre, since in March this year, it had
asked state governments to reduce VAT on jet fuel to provide relief to the
cash-strapped aviation sector. So, the flight tickets may go up to 2 per cent,
which may not be very high. The domestic airlines are said to have spent an
estimated amount of Rs 27,000 crore on ATF in 2013-14.A highly-placed source
said that the decision related to increase in VAT on aviation fuel is likely to
be implemented within two weeks.An aviation expert said that any state should
not increase VAT further on jet fuel as that will affect this sector
adversely.â€The expert, however, admitted that certain states implement much
higher VAT on ATF, which if rationalised by states would bring down airline
operational costs substantially.In the Budget Session, the AAP government had
introduced a VAT Amendment Bill that allows it to hike the tax on 11 goods by up
to 30 per cent in future, taking into account the poor VAT collection in the
previous few months. The increase in VAT is likely to fetch an additional
monthly revenue of at least Rs 6-7 crore to the Delhi government. The price of
ATF sold in the country is already 50 to 60 per cent higher than countries like
Singapore and Dubai, because of the additional state VAT or sales tax
implemented on it.Earlier, the cap on the VAT on 11 items under the fourth
schedule was between 12. "The ATF accounts for up to 50 per cent of the
operational cost of an airline as against 35 per cent globally.In an attempt to
meet its failing revenue target, the AAP government is planning to increase the
value-added tax (VAT) on the air brake
valve Manufacturer aviation turbine fuel (ATF) from the current 20 per cent
to 25 per cent..Once VAT is increased on the ATF, the prices of routine domestic
flight tickets will also go up as all domestic airlines buying jet fuel from
Delhi will have to pay five per cent extra. Aviation experts believe this
increase is likely to percolate down to passengers.5 and 20 per cent. The VAT
accounts for a major source of revenue for the Delhi government. "The VAT is
being increased by only five per cent to ensure that there was little impact on
the aviation sector and the passengers,†a senior official told this newspaper
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