Civil Aviation Ministry to urge Finance Ministry to bring ATF under GST
To contain the rise in jet fuel prices and its cascading impact on air ticket prices, Civil Aviation Ministry will urge the Finance Ministry to bring the particular fuel type under the ambit of GST.
Civil Aviation Secretary Rajiv Nayan Choubey on Tuesday said, a proposal will be made to the Ministry of Finance to bring air turbine fuel (ATF) under the ambit of GST to contain the rise in jet fuel cost due to high global crude oil prices.
Since January 2017-May 2018, the rise in global crude oil prices have pushed ATF cost by 40 per cent.
Currently, state levies add anywhere from 2 to 30 per cent extra on the sale of jet fuel. Under the GST regime the cost is expected to come down substantially.
However, the decision to bring the particular fuel type under the GST ambit will depend upon the Finance Ministry as the same will be required to be mooted by it in the GST Council.
If passed, then the airline sector can expect to get a relief of more than Rs 3,000 crore under the ‘input credit’ model of the GST.
Choubey cited the example of “bunker oil” which is used in the shipping industry has been added under the GST, a similar exercise can be carried out for jet fuel.
Lately, geo-political tensions in the Middle East and supply side constraints have led to a surge in global crude oil prices. The latest Brent crude price hovered around $80 per barrel mark.
The fuel cost constitute nearly 40 per cent of the operational cost for airlines.