The GST Council is deliberating the difficulty of together with Aviation Turbine Gas (ATF) underneath the Items and Providers Tax (GST) framework, Enterprise Immediately TV has learnt from sources.
As per the present tax construction, ATF is at present topic to an 11 % central excise responsibility. A diminished fee of two % is on the market underneath the Regional Connectivity Scheme (RCS).
Along with excise duties, VAT is levied on ATF at totally different charges relying on the state, including complexity and inconsistency within the taxation.
ATF is taken into account a variant of kerosene oil. Whereas nearly all of inputs required for producing ATF are lined underneath the GST regime, ATF itself is excluded, which leads to an inefficiency within the tax construction.
At present, ATF and pure fuel fall outdoors the GST regime and are topic to state-level taxes, together with excise responsibility and value-added tax (VAT). These taxes fluctuate throughout states, considerably rising operational prices for industries comparable to airways, which have lengthy sought uniformity in taxation. As an example, ATF can entice VAT charges as excessive as 30 % in some states.
Affect on aviation trade
The VAT on ATF is utilized on the complete worth, together with the excise responsibility, resulting in cascading of taxes (tax on tax). This will increase the efficient value of ATF.
Producers of ATF are unable to say enter tax credit score (ITC) on the GST paid on their inputs, which provides to the general value of manufacturing and raises costs for the aviation sector.
Advantages of inclusion underneath GST
If ATF is introduced underneath the GST regime, it will assist in eliminating cascading taxes by permitting producers to avail enter tax credit score.
This might considerably scale back the general value of ATF on the refinery degree, doubtlessly decreasing prices for the aviation trade and inspiring higher value predictability and stability.
Tarun Kapoor, Advisor to the Prime Minister’s Workplace (PMO), has mentioned that the federal government is working to convey aviation turbine gas (ATF) and pure fuel underneath the Items and Providers Tax (GST) regime inside this monetary yr. Kapoor confirmed that discussions are underway to implement this shift, which has been a long-standing demand from varied sectors, particularly aviation and vitality.
The continued discussions round this subject purpose to streamline the tax construction for ATF, making it extra environment friendly and fewer burdensome for the aviation sector, which is already coping with varied value challenges.
