Oil firms cut jet fuel prices

Oil firms cut jet fuel prices

New Delhi: State-run oil firms on Monday cut jet fuel prices further by Rs2,100 per kilolitre on top of the 17% reduction announced last week, after government exempt the fuel from payment of customs duty.

Government had on 31 October exempted jet fuel from 5% import duty.

Indian Oil, Bharat Petroleum and Hindustan Petroleum had from 1 November cut jet fuel or aviation turbine fuel (ATF) price in Delhi by Rs9,429.87 per kl to Rs47,017.93 per kl, in line with fall in international oil prices.

“On an average, ATF price for domestic airlines will be further reduced by Rs2,100 per kl with effect from midnight tonight. For international airlines (which do not pay local sales tax or VAT), the reduction would be $35 per kl," an industry official said.

Though there are no imports of jet fuel and it is a freely priced petroleum product, the price of domestically produced fuel is based on import parity price factoring in the basic customs duty.

The price is calculated by taking the average international price of jet fuel during a fortnight and adding 5% customs duty to arrive at the landed price. On top of this, 8% excise duty is levied and over and above this local sales tax or VAT is charged.

The exemption would result in lowering of the base price of ATF and, consequently, lowering the incidence of excise duty and VAT, giving substantial relief to the aviation sector.