Minister of State for Civil Aviation Jayant Sinha has said that there was no proposal to bring Aviation Turbine Fuel (ATF) under goods and services tax (GST), despite there is a demand from airlines for inclusion of aviation turbine fuel in new tax regime. ATF constitutes approximately 35-40% of operational cost of an airline in India. Airlines, which are making a persistent demand for this, maintain that they would get an annual relief of Rs 3,000 to Rs 5,000 crore if ATF is included in GST.
Earlier, Civil Aviation Minister Suresh Prabhu had said the move will help cut the cost as airlines would get input tax credit. He stated that ‘We are very keen. I am pursuing this with the GST council that it (ATF) is brought under the purview of the GST, then off course (we can get) input tax credit and as a result of which, cost of aviation will go down’.
Besides, civil aviation secretary R.N. Choubey had said that the matter will be taken up with the finance ministry as jet fuel prices have risen 40% since January, 2017. Additionally, since January 2017 - May 2018, the rise in global crude oil prices has pushed ATF cost by 40%. ATF has been subject to an excise duty of 14% and on top to this, state governments impose a value-added tax (VAT), which varies from 4- 30%.