Aviation ministry proposes abolition of service tax on air tickets & sales tax reduction on ATF

NEW DELHI: The aviation ministry has called for abolition of service tax on air tickets and reduction in sales tax on aviation fuel from an average 25% to a uniform 4%, proposals that may not only nurse bleeding carriers back to profits, but also rein in soaring fares.

In a consultation paper released last Thursday, the ministry said the policy changes would bring in economic benefits to the tune of 45,000 crore, far outweighing the revenue loss to the exchequer, which is estimated at 3,750 crore.

The proposals are part of a larger action plan being drawn to develop India as an aviation hub. The ministry will discuss the plan with the Prime Minister's Office on Monday.

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