Jammu and Kashmir reduced Monday’s value added tax on turbine fuel to 1% in order to improve air connectivity.
ATF prices are a significant component of operating costs for airlines. The state’s levy significantly increases their price.
Industry estimates show that ATF prices account for more than 40% of the total operating costs of domestic carriers. This figure is 70% higher than the global average.
Prior to the reduction in VAT, the Union Territory imposed a 26.5 percent VAT on ATF. This made flight tickets more expensive for routes linking the state with the rest of the nation.
Airlines are expected to lower ticket prices as a result of the price reduction.
“The UT in J&K is a breakthrough for regional air connectivity. In a tweet, Civil Aviation JyotiradityaM. Scindia stated that the UT in J&K had also reduced the VAT on ATF from 26.5% down to 1%, following the example of the proactive governments of Uttarakhand, Andaman, Nicobar Islands and Uttarakhand. Flight connectivity is affected by lower operational costs of airlines. “Given the disruption caused the pandemic it is important that States collaborate with @MoCA_GoI in order to not only bring the sector back on track but also stimulate greater economic activity within their respective regions.”