Call for GST tag on jet fuel

Airlines lobbying hard to bring aviation turbine fuel within the GST

The Jet Airways impasse has once again brought high aviation fuel prices into the limelight.

Airlines have been lobbying hard to bring aviation turbine fuel (ATF) within the GST. High fuel price is a principal reason for Jet’s poor financial performance that led to founder Naresh Goyal’s resignation from the board on Monday and the bailout by lenders led by the SBI.

Aviation fuel makes up about 40 per cent of the operating cost of an airline, while fuel prices in the country are higher by about 35 per cent than elsewhere.

ATF, at present, attracts an excise duty of 11 per cent and over this central levy, states charge different rates of value-added tax (VAT) that takes the final tax up to 30 per cent.

Analysts blamed the lack of political will behind the high prices, particularly among states who do not want to let go of such a ready revenue source.

Besides fuel, airlines have to pay surcharges, user development fee and steep navigational, landing and parking charges at the airports.

Major gains

Airlines can expect an annual relief of at least Rs 3,000-5,000 crore under input tax credit, if fuel is part of the GST.

According to the Centre for Asia Pacific Aviation (CAPA), Indian carriers are poised to lose $550 million- $700 million during 2019-20, less than the estimated loss of $1.7 billion for 2018-19.

Earlier this month, state-owned oil firms hiked fuel prices a steep 8.1 per cent to its costliest level this year as international oil prices rose.


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