The Civil Aviation Ministry is likely to approach the GST Council soon for bringing aviation turbine fuel (ATF) under the tax regime. An indication to this effect was given by a senior official of an airline here following a meeting with Minister of State for Civil Aviation Jayant Sinha.
The meeting was attended by Air India CMD Pradeep Singh Kharola, Pawan Hans CMD B P Sharma, the CEO of a private airline and the chief financial officers of other carriers. “We have given our suggestion to the ministry and the minister is likely to meet the GST Council soon to present our case,” the senior airline official said.
While various other issues facing the airline industry were raised by the industry, the prominent one was the inclusion of ATF under the Goods and Services Tax (GST) regime. Currently, jet fuel or ATF is not under the GST ambit and the levy on it varies from state to state.
Jet fuel accounts for a significant chunk of an airline’s operational costs which also has an impact on air ticket prices. During the last winter session of Parliament, Sinha informed in a written reply that his ministry had requested the Ministry of Finance to include aviation turbine fuel in the ambit of the GST regime with full input tax credit at the earliest possible.
The long standing demand for a slash in the GST rate in the aviation maintenance, repair and overhaul (MRO) industry was also discussed, said another official on the condition of anonymity. GST is currently levied at 18 per cent on the MRO industry. The MRO Association of India has warned that the industry could face a closure if the GST “anomaly is not set right”.
The association contended that the airlines were finding it cheaper to send their aircraft overseas for maintenance although they cost more. He said the cost benefit that the MRO industry enjoyed because of low cost of labour in India — USD 20 to USD 35 an hour — had been eroded due to the GST burden.
Source: Financial Express