The GST Council on Thursday decided to provide a three-year GST exemption for viability gap funding given under the regional air connectivity scheme.
The scheme, also known as UDAN (Ude Desh ka Aam Naagrik) seeks to connect unserved and under-served airports as well as make flying more affordable. The participating airlines are eligible for VGF subject to certain conditions.
The Council meeting, chaired by Finance Minister Arun Jaitley, has recommended issuance of certain clarifications on issues relating to GST rates and taxability of certain goods and services.
These include extension of "GST exemption on Viability Gap Funding (VGF) for a period of three years from the date of commencement of RCS airport from the present period of one year", according to an official release.
The civil aviation ministry contributes 80 per cent of the VGF amount, while the remaining comes from the state governments concerned and in the case of north-eastern states and Union territories, the sharing ratio is 90:10.
A total of 128 routes connecting 70 airports were awarded in the first round of bidding under the scheme.