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Budget 2016: Air travel set to get costlier

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Budget 2016: Air travel set to get costlier

New Delhi: Airfares are set to get costlier with higher excise duty of 14 per cent proposed on jet fuel in the Union Budget, even as it offers relief to the aviation sector with rationalisation of taxes for MRO works.
The Budget for 2016-17 has brought both cheers as well as tears to the aviation sector as airlines have been seeking lower levy on Aviation Turbine Fuel (ATF), which accounts for over 40 per cent of a carrier’s operating expenses. The government also announced reduced funding to Air India, which would receive Rs 1,713 crore as part of its Rs 30,0231 crore equity infusion plan while the Civil Aviation Ministry saw a lower outlay at Rs 4,417 crore for the 2016-17 fiscal.
The excise duty on Aviation Turbine Fuel (ATF) is to be hiked to 14 per cent from 8 per cent, according to a proposal in Union Budget 2016-17. “Excise duty on ATF, other than for supply to Scheduled Commuter Airlines (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,” Finance Minister Arun Jaitley said while presenting the Budget. The hike in excise duty comes at a time when airlines were seeking lower levy on jet fuel, which accounts for more than 40 per cent of their total operating expenses.

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