PANAJI
Goa’s decision to halve the Value Added Tax(VAT) on aviation turbine fuel (ATF) from 15 per cent to 7 per cent is expectedto ease airlines’ operating costs and support air connectivity to the state,though passengers may not see an immediate reduction in airfares, the Traveland Tourism Association of Goa (TTAG) said on Tuesday.
Welcoming the revised tax rate, which cameinto effect on October 24, TTAG thanked the State government for theinitiative, stating it could benefit the tourism industry by making airoperations more economically viable.
“Jet fuel makes up a massive portion of anairline's total operating expenses (often 50% or more during high-priceperiods). Cutting the tax rate by eight per cent directly relieves financialpressure on carriers refueling in the state,” TTAG said in a press statement.
The association said the reduction couldbenefit Goa’s tourism-dependent businesses by easing the cost burden onairlines serving the state.
“As a premier domestic and internationalholiday destination, Goa relies heavily on accessible air travel. Reducing fuelburdens helps make flying to the state more economically viable, supportinghotels, resorts, tour operators, and local businesses,” it said.
TTAG also pointed to the possibility ofimproved flight connectivity, saying lower fuel costs could encourage airlinesto expand their operations in Goa.
“Major airlines have noted that lower fueloverheads can encourage carriers to introduce additional flight frequencies,open new routes, or maintain existing services to Goa's airports,” theassociation said.
However, the reduction may not translate intocheaper air tickets immediately, as airlines determine fares based on severalfactors, including fuel prices and booking patterns.
“While the state and airlines anticipatelong-term structural benefits for the travel ecosystem, airlines have notimmediately signalled a direct drop in ticket prices, as fares are influencedby broader global crude oil volatility and advance-booking structures,” TTAGsaid.
The government’s decision follows similar taxreductions by Delhi, Maharashtra and Tamil Nadu, which have also lowered VAT onATF, with revised rates ranging from 7 per cent to 16 per cent.
The Finance Department issued a notificationon October 23 amending Schedule C of the Goa Value Added Tax Act, 2005, toimplement the revised rate for the specified category of ATF not covered underthe preceding entry in the schedule.
