Jet fuel makes up 40% of the operating cost of an airline and prices in India are higher by 35% than elsewhere
Airline companies will lobby with the new government to bring aviation turbine fuel (ATF) under the goods and services tax (GST) even as Jet Airways battles for revival.
Aviation fuel makes up about 40 per cent of the operating cost of an airline, and fuel prices in the country are higher by about 35 per cent than elsewhere.
ATF attracts an excise duty of 11 per cent, while states charge additional value-added tax (VAT) that go up to 30 per cent.
The high cost of fuel has been blamed as one of the reasons for the failure of several airlines such as ModiLuft, Damania Airways, Air Sahara, East-West Airlines, Kingfisher and Air Deccan.
Diesel, petrol, crude oil, natural gas and aviation turbine fuel, of the various categories of fuel, are outside the GST, giving states the right to impose value-added tax on them. Items such as kerosene, naphtha and LPG are under the GST.
SpiceJet chairman Ajay Singh had said airlines was a global business and any country couldn’t keep ATF, the single largest cost item in the business, 40 per cent more expensive than elsewhere.
“It is not sustainable, and we will have to find a solution to it. Bringing ATF under the GST ambit can be one solution for it and it has been discussed several times with the government and it has accepted it.
“It has also been discussed at GST meetings and several states have also agreed on it because bringing it into the ambit of the GST will not lead to any revenue loss.
“Hopefully, the GST Council will pick it up for discussion at its next meeting in July 2019 when it meets once again after the elections are over,” he said.
Airlines can expect an annual relief of at least Rs 3,000-5,000 crore under input tax credit if ATF comes under the GST.
Revised every month, ATF prices are linked to a global benchmark and the foreign exchange rate in the preceding month. They have risen 9 per cent between January and March, data by Indian Oil Corporation showed.
Source : https://www.telegraphindia.com/business/pitch-for-jet-fuel-in-gst/cid/1689610
