Bizodisha Bureau, Bhubaneswar, June 11, 2015 :

Odisha government on Thursday announced to waive value-added tax (VAT) on jet fuel for flights to international flights. The move marks its effort to woo airlines to start international operations from the Biju Patnaik International airport here.

Chief secretary G.C. Pati said VAT on jet fuel will not be imposed anymore. Earlier the VAT was 5%. The decisions was taken at a meeting of the cabinet held on Thursday.

“The Cabinet decided to exempt VAT on ATF for international flights under the provision of Section 17 A of the Odisha Value Added Tax Act, 2004,” Chief Secretary G C Pati told reporters after the meeting.

Stating that the General Administration Department has drawn up a prospective civil aviation policy, Pati said some incentives have already been announced by the state government. “To attract international airlines to Odisha, the Cabinet felt it necessary to offer them tax incentives to start operations from the Biju Patnaik International Airport, Bhubaneswar,” he said.

As part of its efforts to strengthen aviation network in the state, the Odisha government has already slashed VAT rate on ATF to 5 per cent from the earlier 20 per cent from December 1, 2013.

“As of now, domestic air connectivity to the Biju Patnaik International Airport here has substantially improved compared with the period before December 1, 2013, due to tax reduction on ATF. But till now, not a single international airline operator has started flight from Bhubaneswar as it does not seem to be commercially viable,” Pati said.

Air India has informed the state government that it would consider extension of Dubai-Mumbai flights to Bhubaneswar subject to improvement of resources and commercial viability of operation.

Indigo, too, has assured the state to consider its proposal by extending its Dubai-Mumbai and Bangkok-Kolkata flights to Bhubaneswar if VAT on ATF is reduced to zero per cent for international flights only.

Finance additional chief secretary R. Balakrishnan explained that the decision will not lead to revenue loss for the State exchequer as airlines are yet to start international flights from the Bhubaneswar airport.

Pati, however, clarified that VAT will remain at 5% for domestic flights. He said though Fly Dubai had evinced interest in starting operations from Bhubaneswar airport, the Centre did not give its approval to the proposal.