Jyotiraditya Scindia working with more states to reduce VAT on ATF and bring it under GST

Civil aviation minister Jyotiraditya Scindia said a dozen states that have not reduced VAT on jet fuel are being nudged to lower levies and backed bringing the commodity under the GST umbrella.

Indian carriers have been grappling with high aviation turbine fuel as several opposition-ruled states maintain high VAT, ranging between 20% and 30%. Jet fuel accounts for 40% of an airline’s working prices.

Jyotiraditya Scindia working with more states to reduce VAT on ATF and bring it under GST

While laying out the flight path for the Indian aviation sector at the Times Network India Economic Conclave, Scindia candidly admitted the sharp hike in ATF prices has been causing stress to Indian airlines (which have lost USD 2.9 billion during the pandemic).

Scindia stated that whereas jet gas is now 5 instances larger than what it was two years in the past he has been working to ease the tax burden.

“There has been a phenomenal rise in jet fuel prices. They are up by 60-70% in the past few months. They have risen five-fold in the last two years. We hope that the hike in oil prices (caused by the war in Ukraine) is transient. While in the long run, it will be better to have ATF under GST as that gives input tax credit, in the interim, I am requesting states to lower VAT on jet fuel.”

Jyotiraditya Scindia, UNion Minister for Civil Aviation

He said several policy decisions have been taken to revive the sector. “We have seen a very healthy bounce-back in recent days in the number of domestic air travellers. Regular international air flights were allowed to resume from March-end,” he said.

Domestic fare caps will remain for now as “there is not a single unified voice” (from airlines about their removal). “We have to balance the interest of passengers from very high spot fares and of airlines from very low (below-cost or predatory) fares. At the right time, a decision will be taken on fare caps.”

India will see an investment of INR 98,000 crore by private airport operators and the state-run Airports Authority of India over the next four years

ALSO READ – Indian aviation sector to see investments worth NR 98,000 crore over next 4 years

He said India will see an investment of INR 98,000 crore by private airport operators and the state-run Airports Authority of India over the next four years, which will take the number of operational airports from 141 to over 200 by 2025-26. Two new airlines, Akasa and Jet-II, should start flying by next March.

Further, he said merging Air India and Indian Airlines in 2007 under the UPA was a “fatal mistake”. “Till 2005-06, as separate entities both AI and IA were profitable. They were culturally very different organisations with different purposes. The (2007) merger was destined for disaster.

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