DELHI: Keeping in view the poor financial condition of airlines, the government has decided to move further to bring the aviation turbine fuel (ATF) under the GST.
Officials said that finance ministry and petroleum ministry are of the view that ATF should be under GST. However, some States which earn a lot of revenue through the tax on ATF has not given consent for this. Now, the government will talk to the States on this issue and it will further be kept under consideration in the next GST council meeting in September.
The matter was also discussed in a meeting with the Ministry of Finance on Monday and it came out that many states including Karnataka, Tamil Nadu, Maharashtra and others have not agreed on this. These States earn major revenue through VAT on the ATF. Currently, ATF attracts about 40 % of taxes comprising the VAT and central excise duty.
Sources said that it was discussed that the States will be contacted through video conferencing on the issue in the coming days.
Many airlines including Jet airways have reported losses in their recent financial results and rise in ATF is one of the major reasons behind this. The civil aviation ministry has closed observed this and it is also of the view that bringing ATF under GST would help the loss-making airlines.
Recently, budget carrier IndiGo and Spice Jet reported losses in their latest financial results. After reporting profit for 13 consecutive quarters, SpiceJet reported a loss of Rs 38 crore during the first quarter of the current fiscal. Similarly, IndiGo, one of the largest commercial airline company reported a 97% decline in profits. Amidst the reports of financial crisis, Jet Airways has not announced its first quarter financial results.
According to an estimate, ATF constitutes approximately 35-40 per cent of operational cost of an airline in India. Currently, the ATF costs Rs 69,090 per Kiloletre in Delhi and it has seen steady rise in prices since last few months. The ATF cost was Rs 48.11 per litre In August, 2017 and since then it has registered a constant rise in last one year reaching mark of Rs 69.09 per litre. Officials are of the view that airlines are not able to pass on the rise in ATF prices to the ticket price or air fare due to stiff competition in the aviation sector and it is adversely impacting the financial performances of airlines.
Rising ATF price
Month-Year ATF price (Rs/litre in Delhi)
August, 2017 48.11
December, 2017 57.34
March, 2018 61.68
August, 2018 69.09