Andhra Pradesh hikes VAT on jet fuel

The Andhra Pradesh government has raised tax on jet fuel to 16 per cent from 4 per cent earlier, a move that will have an impact on airlines operations.

The hike will come into effect from February 1, Principal Secretary (Revenue) Asutosh Mishra said.

The hike in tax on aviation turbine fuel (ATF) comes as part of the state government’s drive to enhance various taxes to shore up its dwindling revenues, official sources said.

The hike in ATF has been effected under Section 79 (1) of the Andhra Pradesh Value Added Tax Act, 2005 by amending the Schedule-VI of the Act, as per an order issued by the Principal Secretary.

With the tax on ATF in Andhra Pradesh being one of the lowest in the country, main airliners have made Hyderabad their re-fuelling hub.

"Tax on ATF in other states is 20 per cent now. So comparatively, there will still be a 4 per cent gap in the tax rate even after the hike. There will be an impact but relatively it will be less," an executive of an airliner said.

The Andhra Pradesh government is facing a shortfall of over Rs 10,000 crore in revenues this financial year. Consequently, it enhanced value-added tax on various items from 12.5 per cent to 14.5 per cent recently and has now hiked the tax on ATF as well.

All these measures are expected to yield an additional revenue of about Rs 6,000 crore to the state, according to official sources.