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Indian Government Mulls Jet Fuel Relief

by Mary Swire, Tax-News.com, Hong Kong

27 November 2008


India's Civil Aviation Ministry has called upon the government to consider rationalizing the taxes applied to jet fuel in a bid to encourage the country's airlines to reduce their rising airfares.

The Ministry is hoping to persuade the government to re-classify jet fuel as a 'declared good', which would automatically reduce the state tax rates applied to it and levy it at a flat rate of 4%.

Currently, the tax rates applied to jet fuel vary from state to state, the highest being 29% in Tamil Nadu and Bahir. By making jet fuel a declared good, states could then significantly reduce their tax rates, subsequently giving the country's airlines the opportunity to reduce their fares.

The Civil Aviation Ministry has made previous attempts to encourage the government to allow ATF to become a declared good with a flat rate tax of 4%. However, the country's Finance Ministry has dismissed this, stating that it would prefer to re-introduce the tax at a rate of 12.5%.

The government has yet to give official comment on the matter.


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