With an aim to bring aviation turbine fuel (ATF) within the ambit of the new tax regime, the Civil Aviation Ministry is likely to approach the Goods and Services Tax (GST) Council soon. At present, jet fuel or ATF is not levied with GST and tax collection on this depends from state to state. Jet fuel plays an important role in the operational amount of an airlines outlay which also impacts the ticket charges for air travel.
Minister of State for Civil Aviation Jayant Sinha has said that his ministry had requested the Ministry of Finance to include aviation turbine fuel in the ambit of the GST regime with full input tax credit at the earliest possible. The long standing demand for a slash in the GST rate in the aviation maintenance, repair and overhaul (MRO) industry was also discussed.
GST is currently levied at 18% on the MRO industry. The MRO Association of India has warned that the industry could face a closure if the GST anomaly is not set right. The association contended that the airlines were finding it cheaper to send their aircraft overseas for maintenance although they cost more. The cost benefit that the MRO industry enjoyed because of low cost of labour in India - $20 to $35 an hour - had been eroded due to the GST burden.