|VAT a take off|
|Thursday, 21 August 2014 00:00|
Slashing VAT on ATF helps small-town India take off
A glance at the air traffic movement data shows how even today much of the country’s passenger throughput is concentrated in the metros and bigger cities. Indeed, small-town India hasn’t really been a part of the explosion in passenger growth over the past decade partly because fares have been out of reach for most and connectivity very poor. Some of this is changing and could change significantly if more states decide to cut the value added tax (VAT) that airlines pay on aviation turbine fuel (ATF). At Bagdogra, for instance, the VAT is now zero as a consequence of which airlines have been prompted to increase the number of flights at the airport. The lower outgo on taxes has also given them some leeway to trim fares and the result has been a huge 64% y-o-y jump in passenger traffic in April-May on the back of a 37% increase in the number of flights. The story at other smaller airports, where the governments have lowered the VAT on jet fuel, if not as spectacular, is nonetheless worth telling.
|Last Updated ( Tuesday, 26 August 2014 00:04 )|