In order to meet its falling revenue target, the Arvind Kejriwal Government is planning to hike VAT on Aviation Turbine Fuel (ATF) from 20 to 25 per cent in the national Capital. This hike is likely to impact domestic and international air travel as tickets will become costlier.
As a result, all domestic aircraft buying jet fuel from Delhi will have to pay five per cent extra VAT, which experts believe might compel passengers to pay more for tickets.
A proposal to this effect has been mooted by the VAT Department. It is estimated that the increase in VAT is likely to fetch an additional monthly revenue of at least Rs8 to Rs10 crore to the Delhi Government, as about 70,000-75,000 lakh kilo litres of jet fuel is consumed in Delhi every month for domestic flights.
VAT accounts for a major source of revenue for the Delhi Government.
Top sources told The Pioneer that the Government is considering a proposal on hiking VAT on ATF from the existing 20 per cent to 25 per cent.
“The decision is being taken in the light of poor VAT revenues collected from ATF, which had gone down significantly since the beginning of this year because of a massive decline in global oil prices,” said the sources.
Being the capital, the domestic and international airport serve as the origin as well as the transit point to hundreds of flights every day and many aircraft refill their jet fuel from Delhi, said the sources.
It would be pertinent to mention that the AAP Government has set a target of revenue collection of Rs24, 000 crore for the current financial year as compared to Rs18, 500 crore in the last financial year. According to data, the Delhi Government’s VAT has been able to collect only Rs11,000 crore till November this year.
The AAP Government had introduced a VAT Amendment Bill that will allow the Government to hike the tax on 11 goods by up to 30 per cent in future, taking into account the poor VAT collection in the previous few months while presenting budget for 2015-16.
As per amendment, the Government can increase VAT on ATF, petroleum and tobacco related products, such as naptha, spirit, gasoline, furnace oil, wax (except candle wax), any mixture and combination of above products, foreign liquor and Indian-made foreign liquor, country liquor, narcotics, molasses, rectified spirit, lottery tickets, brake fluid, tobacco gutkha, unprocessed tobacco, bidis and tobacco used in making bidis and hookah tobacco, aerated drinks and watches costing above Rs5,000.
Earlier, the cap on the VAT on 11 items under the fourth schedule was between 12.5 and 20 per cent.