The government is likely to propose a formula to bring aviation turbine fuel (ATF) under the ambit of Goods and Services Tax (GST), CNBC TV18 reported on February 21.
The likely government proposal will be to allow 18% GST in addition to VAT or excise rate, adding that the formula would be introduced only if it’s acceptable to all the states. The VAT or excise rate, under the formula, could vary from state to state, the report claimed.
“Globally also, in many countries such a formula of GST rate plus VAT/excise has been used in the case of ATF,” a senior government official told CNBC TV18.
The proposal is expected to be tabled before the states and union territories at the next GST Council meeting, the news channel noted.
The Central Board of Indirect Taxes and Customs (CBIC) has “evaluated” the model for ATF’s inclusion under GST, the government official claimed, adding, “The GST Council will be appraised with this global best practice model for them to take a final call.”
Also, as per the norms, any rate proposal is made to the council after GST Council nominated fitment committee assesses the proposal in totality and then makes its recommendations to the GST Council.
It is then upon the GST Council, where state Finance Ministers and Union Finance Minister deliberate on the proposal and make a decision whether to accept or reject the proposal or to tweak the proposal and then accept it to be introduced.
The report comes days after ATF prices soared to record high levels across the country. The rates were increased by 5.2% on February 16 in line with a rise in international oil prices.
This is the fourth hike in jet fuel or ATF prices in less than two months following a spike in global oil prices but petrol and diesel prices remained unchanged for a record 103rd day in a row, coinciding with electioneering to elect new governments in states like Uttar Pradesh and Punjab.
ATF price was hiked by INR 4,481.63 per kilolitre or 5.2% to INR 90,519.79 per kl in the national capital, according to a price notification of state-owned fuel retailers. This is the highest ever price touched by ATF.
The rate is higher than INR 71,028.26 per kl reached in August 2008 when international crude oil prices touched USD 147 per barrel. Brent crude oil on Tuesday, February 22 was trading at USD 93.87 per barrel.
This is the highest ever price touched by ATF. The price increase will put pressure on the already strained balance sheets of airlines that are yet to resume full operations due to pandemic-related restrictions.