The Hindu : National : Cut tax on aviation fuel: Hoda panel

Online edition of India's National Newspaper
Thursday, Apr 03, 2008
ePaper | Mobile/PDA Version

National

National

Cut tax on aviation fuel: Hoda panel

Special Correspondent

NEW DELHI: A high-level committee set up by the Planning Commission on Wednesday recommended further reforms in the banking, insurance, Information Technology and shipping sectors, while pitching for a cut in taxes on aviation turbine fuel (ATF) to facilitate cheaper air travel.

In its report submitted to Prime Minister Manmohan Singh, the committee, headed by Commission member Anwarul Hoda, sought a benign tax regime for IT and shipping to encourage increased private sector participation in the services sector, which accounted for over 50 per cent of the country’s economy.

On ATF, the committee said the cost was on the rise on account of the global surge in crude prices. Therefore, “either the Centre should bring ATF within the ‘Declared Goods’ or the States should be persuaded to adopt the standard Value Added Tax rate of 12.5 per cent.”

At a press conference here, Mr. Hoda said the AFT price spiral “has been exacerbated by State governments levying tax at high rates.”

As for banking, the committee favoured consolidation of the sector and suggested that the government do away with priority sector lending and carry out reforms in the ownership structure of public sector banks. Now its stake in a state-owned bank is stipulated at a minimum of 51 per cent.

On the insurance sector, the panel said the government should permit greater foreign direct investment (FDI) in private sector companies. In effect, it suggested a higher FDI cap in the sector, now pegged at 26 per cent.

Turning to retail, the committee stressed the need for a revamp in the service tax structure to encourage organised retailing. It sought to do away with or modify the various laws and regulations which were hampering the growth of retail trade.

Printer friendly page
Send this article to Friends by E-Mail

National