• Notification Date: 07-05-2022
• Notification No: N/A

Guidance on Including ATF into the GST Framework

The prices of aviation turbine fuel (ATF) have risen for the ninth time on May 1, 2022 due to a global surge in energy prices. The prices of ATF have been hiked by a margin of 3.22 per cent recently. Jet fuel constitutes almost 40 per cent of the total expenditures of operating an airplane. So, this price hike has increased the stress on the airlines.

The aviation is upgrading their operations after two long years to meet the increasing demands of the public in the post COVID-19 pandemic situation. The industry is still under the pressure of the fare caps imposed by the government. Hence, the airlines industry is trying to figure out some way around the rising prices of ATF. The Ministry of Civil Aviation is taking the possible steps towards decreasing the rates of value-added tax (VAT) applied on ATF. The charges of VAT are quite high at most of the major airports of the country.

The aviation industry has appealed the Central Government to include aviation turbine fuel (ATF) under the schemes of Goods and Services Tax (GST). This would relieve the aviation industry from the current stressful situation as the industry will be able to avail of the benefits from input tax credit (ITC).

The aviation ministry has also appealed to the Finance Ministry to include ATF under GST scheme at an applicable rate. The rate of GST applied on ATF should not be more than 12 per cent and the benefits of ITC must be fully available. This matter is pending to be discussed by the Union Government in the upcoming GST Council meeting.

ATF can be included under the GST framework if the GST Council agrees to accept this proposal. Every state across India does not have the infrastructure of refueling aircrafts at the airport. Hence, only 15 states in India have interest in ATF. The product can only be sold at the airports where the aircrafts refueling facilities are provided.

Out of the 15 states in India who have ATF refueling facilities, Karnataka, Delhi, Maharashtra, Kerala, West Bengal, Tamil Nadu, and Gujarat have the highest demands for ATF refueling as there are multiple airports in these seven states with the refueling infrastructure.

As per the statement of the senior government officials, an integrated GST model is being planned to include aviation turbine fuel into the GST framework. It is being anticipated that the fitment committee will recommend an IGST model for the inclusion of aviation fuel into GST. The committee comprises of officers from various states across India. The officers are making suggestions to change the tax rates to the GST Council.