Ronojoy Dutta, Whole Time Director and Chief Executive Officer, IndiGo on Wednesday (March 16) said that considering the present record high crude oil prices, there is an immediate need to bring aviation turbine fuel (ATF) under GST as it brings the benefit of input tax credit.
“Over the past few weeks, crude oil prices have soared to a 7-year high nearing $140 per barrel, due to the ongoing conflict in Europe. This has resulted in over 50% ATF price hike from January 2022 till date, including the 18% hike today.
“This situation adversely impacts us, given that ATF constitutes over 45% of our operational costs. We have been in talks with the government to bring ATF under GST as it brings the benefit of input tax credit. We believe that such measures are needed now more than ever to offset this increase in cost and make flying viable for airlines and affordable for consumers,” said Dutta.
ATF was increased by 17,135.63 per kl, or 18.3%, to ₹1,10,666.29 per kl in the national capital, according to a price notification by State-owned fuel retailers.
Union Finance Minister, Nirmala Sitharaman had earlier said in February that the government will bring for discussion in the next meeting of the GST Council the issue of bringing ATF into the goods and services tax regime as the FM noted that rising global fuel prices is a “concern”.
Sitharaman was responding to views expressed by SpiceJet Founder Ajay Singh in a post-Budget discussion with industry chamber ASSOCHAM where he sought the support of the Union finance minister in bringing ATF into the GST regime.
“A rationalization of taxes will result in high growth for the sector, creating a multiplier effect throughout the economy, promoting trade, tourism and job creation,” added Dutta.
The issue of inclusion of ATF under GST has been a long standing issue. Last year the Civil Aviation Ministry had formally asked the Finance Ministry to bring ATF under the ambit of GST at an applicable rate not higher than 12% with full input tax credit,
Airlines have also in the past suggested that till ATF is placed under GST, VAT should be capped at 5% and the 11% excise duty should be eliminated.
When the GST was introduced on July 1, 2017, amalgamating over a dozen central and state levies, five commodities of crude oil, natural gas, petrol, diesel and ATF were kept out of its purview given the revenue dependence of the central and state governments on this sector.
Photo Courtesy: Trade Brains