The Gujarat government has sharply reduced tax on aeroplane fuel for flights operating within the state to encourage intra-state aviation. Value-added tax on Aviation Turbine Fuel was cut from 30% to 4% for all non-scheduled flights days after the state called on Deccan Charters to start intra-state aviation service.
Corporates operating own flights in the state can now save up to 20% on fuel costs. Fuel cost constitutes around 40% of the total operating cost of an airline. Business groups like Adani, Reliance, Essar, United Phosphorous, Sterling, Electrotherm among others regularly use own planes in the state.
Aviation experts say the decision will boost business travel and tourism within the state. Gujarat is among the top three states that attract highest domestic investments.