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Traveling by air was distant dream for many of us until a few years ago. The boom in aviation services and the rise of low fare airlines has made air travel easily available to and affordable for middle class Indians. However, with rising global fuel prices that result in higher jet fuel, airfares get pushed higher. So, will the budget do something to help keep a lid on airfares thus making our holiday travel plans more affordable?
The issue under debate is the following. Aviation Turbine Fuel (ATF) is based on global fuel prices. Oil prices are currently at a two-year high, given the recent political crises in North Africa and the Middle East, which have also pushed up jet fuel prices. The Indian state-owned oil companies have been regularly passing on these rising costs to airlines by increasing the price of ATF. Airlines, in turn, pass on these costs to passengers by levying a fuel surcharge. As a result, passengers end up paying almost half of the ticket price or more in fuel surcharge.
Airlines argue that the sales tax on aviation fuel should be cut. In the very least, they say that the sales tax should be a uniform rate of 4% across the country, rather than the current system whereby each state is allowed to levy its own rate of sales tax resulting in prices that could be as much as 30% higher in some states. Airlines argue that a uniform rate will help in bringing down the final ticket price that passengers pay for air travel.
Almost every year in the run up to the budget the issue of ATF and sales tax comes up. And this year is the same, with industry organizations asking the Finance Ministry for some relief for the airline sector.
As consumers, most of us are price sensitive, so anything that can bring down airfares would be very welcome. Especially, if it means that what gets announced on the budget day can materially impact the price that we might end up paying for our spring and summer vacations in just a few months. Lets hope that this year's is a "bon budget" that will put us in the right mood for a bon voyage.
By www.iTrust.in - India's leading one-stop financial supermarket for real estate, home loans, investments, taxes and financial planning.
