BackNo decision yet on jet fuel tax cut: Report
Civil Aviation Minister Jyotiraditya Scindia has been making a case for lowering the high taxes on aviation turbine fuel (ATF) even as most states have already moved to significantly reduce the value-added tax (VAT)
PremiumThe Ministry of Finance is yet to take a decision on the civil aviation ministry's plea for tax cuts on jet fuel (ATF) to bring down prices, according to a PTI report.
"They (civil aviation ministry) have approached us with a plea to moderate the prices. However, no decision has been taken yet," the report added.
Civil Aviation Minister Jyotiraditya Scindia has been making a case for lowering the high taxes on aviation turbine fuel (ATF) even as most states have already moved to significantly reduce the value-added tax (VAT).
The civil aviation ministry continues to be in discussion with the finance minister over the matter.
Nearly 23 states have lowered VAT on jet fuel from highs of 20-30%. And now it wants the central government to cut excise duty.
ATF price hiked by 5.3%
Jet fuel prices were hiked recently by a steep 5.3 per cent - the tenth straight increase this year -- to an all-time high, in line with a surge in global energy prices.
The price of ATF -- the fuel that helps aeroplanes fly -- was hiked by ₹6,188.25 per kilolitre, or 5.29 per cent, to ₹1,23,039.71 per kl ( ₹123 per litre) in the national capital.
This is the 10th straight increase in jet fuel prices this year.
Jet fuel prices are revised on the 1st and 16th of every month, while petrol and diesel rates are revised daily, based on equivalent rates in the international market.
Jet fuel, which makes up for almost 40 per cent of the running cost of an airline, has this year surged to new highs. ATF prices have increased every fortnight since the start of 2022. In the nine hikes beginning January 1, ATF prices have been increased by ₹49,017.8 per kl ( ₹49 per litre) or nearly 55 per cent.
And since India is 85 per cent dependent on imports to meet its oil needs, the only way to cut jet fuel prices is to reduce taxes.
While BJP-ruled states have reduced VAT, the states housing the country's busiest airports of Delhi, Mumbai, Chennai and Kolkata have not done so yet.
ATF presently is chargeable at an 11 per cent ad valorem rate of excise duty. A concessional rate of 2 per cent is applicable for ATF sold under the Regional Connectivity Scheme.
Ad valorem rate means the incidence of taxation rises whenever there is an increase in the base price.
Some in the industry have demanded that the government bring specific excise duty expressed in ₹per kilolitre to insulate airlines from such volatility.
Petrol and diesel already attract a specific rate of excise duty.
ATF attracts both excise duty of the central government and sales tax or VAT of states. This because when the Goods and Services Tax (GST) was introduced on July 1, 2017, amalgamating 17 central and state levies, five commodities -- namely crude oil, natural gas, petrol, diesel, and ATF -- were kept out of its purview given the revenue dependence of state governments on this sector.
The aviation ministry has time and again sought the inclusion of ATF under GST. The oil ministry too has favoured including ATF along with natural gas under the GST regime to help companies set off tax that they pay on input.
Till now, no proposal for including ATF in GST has been made to the GST Council -- the apex decision-making body of the new indirect tax regime.
With agency inputs
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