NEW DELHI: The aviation industry is unlikely to get any relief from high fuel prices as the Finance Ministry is in no mood to bring Aviation Turbine Fuel (ATF) under the ambit of the Goods and Services Tax (GST). Last week, the aviation industry had approached the finance ministry over the high price of ATF and said it was hurting the sector badly and was impacting air ticket prices. It had requested the ministry to bring ATF under the ambit of GST. However, the finance ministry is in no hurry to consider this.
“Yes, we are aware of the request. However, currently it is not feasible. The policy decision will require consultation among various ministries, states, and we have to find a mechanism to implement it. We are not completely ruling it out, but I do not see it happening anytime soon,” a senior official in the Finance Ministry told The New Indian Express. A rise in global crude oil prices has pushed up the cost of ATF by 40 per cent in the last 15 months, as it constitutes about 40 per cent of an airline’s operating cost. As summer vacations have just begun, the aviation industry feels that high fuel prices will continue to push up the air travel price and will play a spoiler in the peak season.
Currently there is excise duty of 14 per cent on ATF, topped by sales tax and value added tax, which goes up to 30 per cent in many states. The airline companies also complain that they provided credit only on VAT. Once it is under GST, airlines can expect an annual relief of up to Rs 5,000 crore by way of input tax credit.
The matter was also underlined by Civil Aviation Minister Suresh Prabhu last week.He assured the aviation players that he will talk to the GST Council and pitch for inclusion of ATF under GST, which will make fuel cheaper for the industry. The Finance Ministry has given an assurance that the matter would be taken up this week. On a positive note, prices of Brent crude fell further by 1.88 per cent to $75 per barrel in the global markets.