New Delhi: The West Bengal government has slashed sales tax on jet fuel by 50% for any new flight that an Indian airline wants to start from Kolkata and has made it tax-free for two other airports in the state in what will come as a major relief for cash-strapped carriers.

Jet fuel, or aviation turbine fuel (ATF), makes about 40-50% of an airlines cost in India, and Kolkata will be the first metro airport to have listened to the plea of airlines for nearly a decade now to reduce sales tax.

“The state government by way of incentivising the increase in the number of flights to and from Kolkata, Bagdogra, Coochbehar airports to promote tourism and travel has taken the following decisions," the West Bengal government said in a note released on 8 August and reviewed by Mint.

There will be a 50% rebate on tax on additional ATF sold to any airline from the Kolkata airport compared with corresponding ATF consumed by the airline in 2012-2013, the note said adding it has also made total sales tax exemption on ATF sold from Coochbehar and Bagdogra airports for a period of three years.

The existing sales rate on ATF in West Bengal is as high as 30%.

The proposal to cut taxes on new flights was first mooted in May this year when a delegation led by Arun Mishra, Director General of Civil Aviation (DGCA), aviation ministry officials and airline executives had met West Bengal chief minister Mamata Banerjee.

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