The civil aviation ministry is working on the airline industry’s demand to bring Aviation Turbine Fuel (ATF) under the ambit of GST and has taken up the matter with the finance ministry, a senior government official said on Friday.
Addressing a virtual event on global aviation and air cargo sector, civil aviation secretary Pradeep Singh Kharola also said the ministry has taken specific steps for optimum utilisation of the country’s vast airspace, which would help international airlines overflying India as well as domestic carriers in saving costs.
A PTI report in Mint said that ATF or jet fuel cost, which account for 45-55% of an airline’s operating expenses, in India is among the highest in the world and the industry has long been demanding that it should be brought under the Goods and Services Tax (GST) regime.
Has to go GST Council: Govt
“We are working (on bringing ATF under the GST) and the matter has been taken up with the Ministry of Finance… It has to go to the GST Council. We are trying for that,” Kharola said.
Last year the government had said that it was making a renewed push for ATF to be included in GST. “Another 2-3 other revenue streams of state governments are linked to ATF prices, we have asked for delinking them as well,” Aviation Minister Hardeep Singh Puri had told CNBC-TV18 in an exclusive interaction.
“We have asked for ATF price adjustments every 15 days given fall in crude prices,” Mr. Puri had said. CNBC-TV18 had exclusively reported quoting sources on March 9, 2020 that the Ministry of Civil Aviation has requested the Ministry of Petroleum and Natural Gas to update jet fuel prices every 15 days.
Currently, aviation turbine fuel (ATF) prices are revised on the first of every month. “We have taken some measures, will take more,” Mr. Puri had then added.
ATF Structure Explained
Financial Express in a story explained the duty structure as following. “If cost of production of ATF is Rs. 100 per kilolitre, the fuel at exit from the refinery will be priced at Rs. 111 per kilolitre after levying 11 per cent excise duty. If the cost rises to Rs. 110, the ex-refinery rate would attract an excise duty of Rs. 12. A specific duty of say Rs. 11 per kilolitre would mean that even if the cost goes up the tax incidence would remain the same.”
Earlier this month, Oil Marketing Companies (OMCs) hiked prices of aviation turbine fuel (ATF) by about 10% over last month as global crude oil prices firmed up on improved demand. Jet fuel accounts for about a fourth of expenses for major domestic airlines.
ATF prices stood at ₹59,400.91 per kiloliter (kl) at New Delhi on March 1, according to a notification by Indian Oil Corp. Ltd (IOCL).