Panel to suggest ways to cut state sales tax on jet fuel

A high-level panel looking into the crisis facing the aviation industry will meet soon to suggest ways and means for state governments to lower their sales tax on jet fuel to provide relief to the beleaguered airlines and help them come out of the major financial crisis.

"It is basically the state sales tax, which people (the airline industry) are agitated about. Sales tax rates in some states are very high, 25 to 30 per cent. That is what we have to look at," Cabinet Secretary K M Chandrasekhar told PTI in an interview.

The Cabinet Secretary is heading the Committee, constituted by Prime Minister Manmohan Singh, following a representation by the airline industry for relief.

Chandrasekhar said the Finance Ministry was talking to the Empowered Committee of State Finance Ministers to find a solution to the whole issue.

"We are trying to do everything in a give and take manner... It is a voluntary exercise (by state governments)," he said.

The industry is demanding that aviation turbine fuel (ATF) be included in the declared category list, which will bind states to tax jet fuel by only up to four per cent.

Referring to the recent cuts in ATF prices and customs duty, the Cabinet Secretary said some demands of the airline industry have been settled by the Ministries of Civil Aviation and Finance.