Aviation ministry asks J&K, others to slash tax on ATF

Aviation ministry asks J&K, others to slash tax on ATF
An Airplane during a night flight operation at Srinagar Airport. [Image for representational purpose only]File/ GK

Srinagar: The Aviation Ministry has asked the J&K government besides several other states/UTs in India, to slash tax rates on Aviation Turbine Fuel (ATF). The move is expected to increase tourism flow to Kashmir.

According to highly placed sources, Minister for Civil Aviation, Jyotiraditya Scindia has written a letter to the J&K administration urging it to “rationalize VAT on ATF”. Besides, J&K, the Aviation Minister has also asked 21 other states/UTs to rationalize tax on ATF across all airports within the range of 1% to 4%.

As per the sources in J&K’s Aviation department, currently J&K charges 26.5 percent “state taxes on ATF” which is added in the ticket pricing. Kashmir being a tourist destination is impacted heavily by the exorbitant airfares particularly during peak tourism season.

The Union Minister in a communiqué while citing examples of progressive states such as Kerala, Andhra Pradesh, Meghalaya, Nagaland, Sikkim and Telangana, writes that they have brought down the VAT to one percent and even below. “As a result, they have seen a substantial jump in the number of aircraft movements in their states.”

The Minister has brought to the attention of the states/UTs that air connectivity directly promotes tourism growth, output growth and employment generation, in addition to various indirect benefits to the economy.

In fact, the aviation sector has a high output multiplier of 3.25 and employment multiplier of 6.1.

An official at Srinagar Airport said that the revenue generated by the UT through this tax is insignificant compared to gains that Kashmir tourism could earn by slashing it, as would hopefully bring huge tourist inflow.

Kashmir’s tourism is often hit by the soaring airfares during the peak season, so much so that intending visitors prefer to visit foreign countries.

Earlier this year, a Parliamentary panel also stated that the airfares to J&K during peak season go “equivalent” to those on foreign destinations as a result of which people prefer visiting foreign countries.

In its report, the department-related Parliamentary standing committee on Transport, Tourism and Culture had said: "Exorbitant price of air tickets is a major dampener. Escalating airfares of 'low cost' carriers during the peak season are a major deterrent to increasing footfall in the region. The airfares are equivalent to that of the nearby foreign destinations and given the sensitivity of the region, tourists would prefer to visit nearby foreign destinations at the same airfare rather than visit J&K."

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