Indian air travel pays 25% tax, but Delhi now cut tax for domestic flights only to 1%

Unlike the UK, India  puts VAT on the price of jet fuel.  Sales Tax (levied by the State Governments) averages across India at 25%.   But now domestic air travel from Delhi is likely to get cheaper with the Delhi government deciding to cut value added tax on aircraft turbine fuel (ATF) to 1% from the existing rate of 25%.  As part of the central government’s connectivity scheme, the Delhi government reduced VAT on ATF by 24% to boost links with smaller airports in its budget for the year 2017-18.  Delhi will have cheaper air links especially to the smaller airports to the north west.  India is the world’s fastest-growing aviation market but most of the air travel is between big cities. Under the regional connectivity scheme, the government will subsidise part of the cost for airlines to operate flights to smaller towns. Jet fuel is one of the biggest costs for airlines, especially for low-cost carriers such as IndiGo Airlines, owned by InterGlobe Aviation, SpiceJet and GoAir. Airline shares rose on the news.
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Indian capital Delhi cuts tax on aviation fuel to boost travel to smaller cities

Reuters  (Times of India)

8.3.2017

The Delhi government has reduced the tax on aviation fuel to 1 percent from 25 percent for flights operating to smaller towns and cities, Deputy Chief Minister Manish Sisodia said, in a move to reduce costs for airlines flying to remote areas from the Indian capital.

The tax reduction is only for airlines operating under the federal government’s regional connectivity scheme, introduced last year to make flying more affordable, Sisodia said on Wednesday while presenting Delhi’s annual budget.

India is the world’s fastest-growing aviation market but most of the air travel is between big cities. Under the regional connectivity scheme, the government will subsidise part of the cost for airlines to operate flights to smaller towns.

Jet fuel is one of the biggest costs for airlines, especially for low-cost carriers such as IndiGo Airlines, owned by InterGlobe Aviation, SpiceJet and GoAir.

Aditya Ghosh, president of IndiGo, India’s largest carrier, requested that the tax break be extended to all air travel out of Delhi, which is the airline’s biggest base.

Airline stocks surged after the news. InterGlobe shares rose as much as 4.37 percent, SpiceJet was up as much as 8.6 percent and Jet Airways gained as much as 6.6 percent. (Reporting by Aditi Shah; Editing by Sunil Nair)

http://timesofindia.indiatimes.com/business/india-business/indian-capital-delhi-cuts-tax-on-aviation-fuel-to-boost-travel-to-smaller-cities/articleshow/57536760.cms

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Delhi budget: Air travel to get cheaper, AAP govt cuts tax on air turbine fuel

Mar 08, 2017
By Faizan Haidar (Hindustan Times – Delhi)

Domestic air travel from Delhi is likely to get government cheaper with the Delhi government deciding to cut value added tax on aircraft turbine fuel (ATF) to 1% from the existing rate of 25% .

As part of the central government’s connectivity scheme, the Delhi government reduced VAT on ATF by 24% to boost links with smaller airports in its budget for the year 2017-18 announced on Wednesday.

“The central government had asked airports part of the regional connectivity scheme to reduce the VAT on ATF. Delhi was not part of it but we proactively reduced VAT so that Delhi can be connected with smaller airports, specially to the northeast,” Deputy chief minister Manish Sisodia said.

Chief minister Arvind Kejriwal praised the decision and said this would lead to air tickets getting cheaper.

“With this, new airlines can come and operate from Delhi. ATF decides flight ticket rates and this will be a huge bonus for fliers,” said a finance department official.

http://www.hindustantimes.com/delhi/delhi-budget-air-travel-from-delhi-to-get-cheaper-as-aap-govt-cuts-tax-on-air-turbine-fuel/story-FKellDWdIwkR2bx3gU9mNM.html