GST Council may discuss inclusion of ATF under GST: Sources  

The GST Council is considering the inclusion of aviation turbine fuel (ATF) in the scope of goods and services tax (GST), sources told Business Today TV.

Under the current tax structure, HTF is currently subject to 11 percent central excise duty.A reduced rate of 2 percent is available under the Regional Connectivity Scheme (RCS).

In addition to excise duty, ATF is charged VAT at varying rates depending on the state, adding to the complexity and inconsistency of taxation.

ATF is considered a variant of kerosene oil.While most of the inputs required to manufacture ATF are covered under the GST regime, ATF itself is excluded, resulting in inefficiencies in the tax structure.

Currently, ATF and natural gas are exempt from the GST regime and are subject to state-level taxes, including excise duty and value-added tax (VAT). are airlines that have long sought uniform taxation.For example, ATF can attract VAT rates as high as 30 percent in some states.

Impact on the aviation industry

The ATF VAT is applied to the entire value, including excise duty, resulting in a cascading tax (tax tax). This increases the effective cost of the ATF.

ATF manufacturers are unable to claim input tax credit (ITC) on the GST paid on their inputs, which increases the overall cost of production and raises prices for the aviation industry.

Benefits of being included in GST

If ATF is brought under the GST regime, it will help eliminate cascading taxes by allowing manufacturers to avail input tax credit.

This could significantly reduce the overall cost of ATF at the refinery level, potentially reducing costs for the aviation industry and encouraging better price predictability and stability.

Advisor to the Prime Minister’s Office (PMO) Tarun Kapoor said the government is working to bring aviation turbine fuel (ATF) and natural gas under the Goods and Services Tax (GST) regime this fiscal year. Kapur confirmed that discussions are underway to implement this shift, which has long been demanded by various sectors, especially aviation and energy.

The ongoing discussions on this topic aim to simplify the ATF tax structure, making it more efficient and less burdensome for the aviation industry, which is already dealing with various cost challenges.