• Notification Date: 22-02-2022
• Notification No: N/A

ATF to be Included under GST by Government

According to the report of CNBC TV18 on February 21, the Government is considering the decision of including aviation turbine fuel (ATF) under the provisions of Goods and Services Tax (GST).

Apart from the VAT and excise rate, an additional GST at the rate of 18 per cent will be applied on the Aviation Turbine Fuel (ATF). According to the information from several sources, the new rule will be brought into action only if it gets approval from all the states. The rate of GST may vary from one state to another.

According to the statement of a senior to CNBC TV18, the new rule of including GST along with VAT or excise rule on ATF is accepted in other countries across the world. This new proposal has been decided to be presented to the states and union territories at the next GST Council meeting.

As the Central Board of Indirect Taxes and Customs (CBIC) has evaluated, the new model of including ATF under the GST provisions could be an opportunity for the GST Council to be appraised with this global best practice model for taking a final decision on this matter.

The rates of ATF have been enhanced by an additional 5.2 per cent to align with the increase in the price of international oil prices. The price rise was declared on February 16 and the report came on the following day. The price rise of ATF has touched the record level.

In the last two months, the prices of ATF and jet fuels have been increased for the fourth time. The prices of global oil have been constantly increasing in the last few days except petrol and diesel. There has been a recorded pause in the hike of the prices of petrol and diesel for consecutive 103 days. The elections date of the new governments in the states of Uttar Pradesh and Punjab coincide with the matter.

According to a price notification of state-owned fuel retailers, the hike in the price of ATF amounts to Rs.4,481.63 per kiloliter. The amount rates to 5.2 per cent to Rs.90,519.79 per kiloliter in the National Capital. This marks the highest price hike of ATF in history.

In August 2008, the price was raised to Rs.71,028.26 per kiloliter. The hike was made when the price of international crude oil was raised to USD 147 per barrel. The recent hike in the prices of ATF is the highest. On Tuesday, the price of Brent crude oil was trading at USD 93.87 per barrel. This rise in the prices of jet fuels and ATF will negatively affect the Airlines industry and put immense pressure on the balance sheets. The Covid-19 pandemic has already created enough downturn in the business which will be further worsened by the price hike.