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NEW DELHI, May 16

PARLIAMENT on Thursday approved a Bill to exempt foreign aircraft from paying taxes on aviation turbine fuel (ATF) and lubricants with the Government, saying that it had initiated consultations with States on rationalisation of taxes with the aim of making air travel cheaper.

The Minister for Civil Aviation, Mr Shahnawaz Hussain, said in the Rajya Sabha today that domestic air travel in India was costlier than travelling to destinations such as Dubai or Bangkok, mainly due to the high tax rates on ATF. Mr Hussain, however, declined to provide any assurance to the House on reimbursement to States for the losses, which they would have to incur after the passage of the Aircraft (exemption from Taxes and Duties on Fuel and Lubricants) Bill, 2000.

Earlier, the Union Government used to pay a subsidy to the States on exempting foreign carriers from levy of sales on ATF. Later, it continued to subsidise it from the oil pool account which now has a big deficit, Mr Hussain said.

The Minister said that Andhra Pradesh had taken the lead in drastically slashing sales tax on ATF to four per cent while the prevailing rates in all other States ranged between 20 and 39 per cent. The cost on ATF alone accounted for about 30 per cent of total air travel cost for international and 22 per cent for domestic sectors, he said. The Bill, which provides for exemption of fuel and lubricants taken by foreign carriers, is in keeping with obligations of the International Civil Aviation Organisation resolution of 1993.

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