Post News Network
Bhubaneswar, June 11: The state cabinet Thursday gave its nod to the proposal for exemption of VAT on Aviation Turbine Fuel (ATF), a step that is expected to attract foreign airlines to begin commercial operations and reach international flights to the state. “The Cabinet has approved the proposal of exemption of VAT on ATF sold to international flights under the provision of Section 17 A of the Orissa Value Added Tax Act, 2004,” chief secretary GC Pati told the media after the meeting chaired by Chief Minister Naveen Patnaik. “The Biju Patnaik Airport here was declared an international airport in November, 2013.
But till now not a single international airline operator has started flights from this airport, as the airlines were of the view that the operations from here would not be commercially viable,” he said.
For making air transport more affordable and enhancing regional and international connectivity, incentives needed to be given to airlines to encourage them start the operations. The General Administration Department therefore prepared a prospective Civil Aviation Policy and certain incentives have been announced by the state government under this.
“The state government had earlier reduced the rate of VAT on ATF from 20 per cent to 5 per cent with effect from December, 2013,” he said, adding, “Now the VAT on ATF for international flights will be completely taken out.” The total exemption of VAT will be for international flights only.
Air India has informed the state government that it would consider extension of the Dubai-Mumbai flights to Bhubaneswar subject to improvement of resources and commercial viability of operation.
Indigo, too, has assured the state it would consider extending its Dubai-Mumbai and Bangkok-Kolkata flights to Bhubaneswar if VAT on ATF is reduced to zero per cent for international flights.
While the collection from ATF during the past three years averaged `30crore per annum, finance additional chief secretary R Balakrishnan said the decision will not lead to any revenue loss for the state exchequer as airlines were yet to start international flights from the Bhubaneswar airport.