The 6 per cent hike proposed in excise duty on jet fuel is all set to make air travel costlier.
The 6 per cent hike proposed in excise duty on jet fuel is all set to make air travel costlier. However, it would not be applicable to the proposed Scheduled Commuter Airlines (SCAs) under the regional connectivity scheme.
The excise duty on ATF is to be hiked to 14 per cent from 8 per cent, according to a Budget proposal. ATF accounts for about 45 percent of the operating cost of airlines. Further, service tax will also be hiked by 0.5 per cent from June 1.
The increased tax has drawn sharp criticism from the aviation sector as it will burden airlines financially who in turn will have to pass on the burden to passengers. However, the Centre has attempted to insulate passengers benefitting from regional connectivity by granting exemption to airlines under the regional connectivity scheme. The increase in excise duty on ATF will be virtually applicable to airlines operating from all airports as the proposal for SCAs and the regional connectivity scheme are yet to be implemented.
“Excise duty on ATF, other than for supply to SCA from the Regional Connectivity Scheme Airports, (is) being increased. ... ATF for supply to aircraft under the Regional Connectivity Scheme will continue to attract 8 per cent excise duty,” Mr Jaitley said.
