Goa does it again: Slashes VAT on aviation fuel

Panaji: In a bid to arrest slump in arrivals and insulate itself from rising airfares during the upcoming tourist season, the Goa government has decided to offer incentives to all airlines refuelling themselves in the beach destination.

Chief Minister Manohar Parrikar yesterday said the state has already slashed Value Added Tax (VAT) on Air Turbine Fuel (ATF) refuelled in the state from 22 percent to mere 12.5 percent.

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"Further we are in the process of drafting a scheme wherein the frequently flying airlines will get refund up to five percent of VAT on ATF from the 12.5 percent. So it would be economical for airlines to refuel the aircraft in Goa," he said.

The rising airfare has become a major concern for the tourism industry which fears that it may contribute to the slump in arrivals.

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Media reports indicated that some of the domestic flights will hike their tickets by 25-30 percent due to rise in ATF pricings. But the state government has said that the rise has been pre-empted due to incentives offered for the airline companies.

"The airline companies which fly more frequently will get refund of VAT on ATF. The more the flights the more would be the benefit. This means they will get more passengers in the state," Parrikar reasoned.

The scheme for the same is being drafted and it will be notified by October-November this year when tourist season starts, he said.

The state government has also announced a scheme of refunding VAT on goods purchased.

Government sources said that both the schemes would be notified in the last quarter of the current calendar year.

PTI