Govt notifies 2% excise duty on jet fuel at RCS airports

Government today notified excise duty of 2 percent for jet fuel purchased from airports that come under the regional connectivity scheme, which seeks to make flying more affordable.

The concessional excise duty rate would be applicable for airlines as well as cargo operators.

Under the Regional Connectivity Scheme (RCS), announced as part of the new civil aviation policy, various financial incentives would be extended to airlines that would fly to unserved and underserved areas.

A basic excise duty at concessional rate of 2 per cent would be levied on "Aviation Turbine Fuel (ATF) drawn by operators or cargo operators from RCS airports for a period of three years," the Central Board of Excise and Customs (CBEC) said in a notification.

The scheme would be for air services connecting "unserved and under-served routes" ranging from 200 to 800 kilometre, while there would be no lower limit for hilly, remote, island and security sensitive regions, as per the draft RCS which was unveiled in July.

At that time, the Civil Aviation Ministry had also said that the central government would only levy an excise duty of 2 per cent on ATF at the RCS airports for three years.

Among others, Viability Gap Funding (VGF) would be extended to airlines participating in the regional connectivity scheme.