With fuel prices surging to new highs, there is a renewed push to bring aviation turbine fuel (ATF) under the ambit of the Goods and Services Tax (GST).
The Ministry of Civil Aviation has given a fresh proposal to the Ministry of Finance to bring ATF under the GST framework, according to a report by Moneycontrol.
The move comes after ATF prices rose more than 100 percent due to a sharp spike in crude oil prices following the United States–Israel–Iran war.
The latest proposal by the Civil Aviation Ministry could be discussed in the next meeting of the GST Council, the report added.
“The Finance Ministry has received a fresh proposal seeking inclusion of aviation turbine fuel in GST. ATF remains one of the largest cost components for airlines, and the industry has been pushing for rationalisation to ease cost pressures amid the ongoing geopolitical tensions. This has been a long-pending demand of the industry,” an official was quoted as saying.
To be fair, the demand to bring ATF, and even petrol and diesel, under the GST regime is a long-standing one.
Airlines argue that taxes imposed by the states lead to a significant rise in ATF prices. Since the cost of ATF contributes to about 40 percent of an airline’s ticket, it plays an important role in the revenue and margins of companies.
On the other hand, taxes on ATF are a crucial source of revenue for states. The implementation of the proposal would require a nod from the states.
While similar proposals have been made to the government in the past, only to be put in cold storage, the latest proposal has been made at a time when the aviation industry is facing unprecedented price hikes.
“Some of these demands have resurfaced due to the current situation, with stakeholders across the aviation ecosystem reiterating the need for relief,” the source was quoted as saying.
The GST Council is expected to meet after the conclusion of elections.
