Drill to bring fuel duo under GST umbrella
The Narendra Modi-government would be keen to push the inclusion of natural gas and aviation turbine fuel (ATF) within the ambit of the goods and services tax to promote the use of green fuel and provide some relief to the airlines.
The next meeting of the GST Council is likely to be held in mid-June and the finance ministry has started doing the groundwork to include these two items in the discussion among the council members.
Officials are hopeful that there would not be much opposition to the inclusion of ATF and natural gas in the GST compared to other petroleum products.
Petroleum products such as kerosene, naphtha and LPG are under the ambit of the GST. However, five items — crude oil, natural gas, aviation fuel, diesel and petrol — have been excluded.
ATF attracts an excise duty of 11 per cent and over this central levy, states charge different rates of value-added tax that go up to 30 per cent. However, aviation fuel constitutes about 40 per cent of the operating cost of an airline, and the fuel prices in the country are higher by about 35 per cent than its global peers.
The high cost of fuel has been blamed as one of the reasons for several airlines, including Jet Airways, ModiLuft, Damania Airways, Air Sahara, Kingfisher and Air Deccan.
The parliamentary standing committee on energy in a report has said that natural gas being a cleaner fuel should not be placed at a disadvantageous position vis-a-vis other sources of energy such as coal.
While coal is taxed at 5 per cent GST, natural gas has been kept outside the purview. The committee, therefore, recommended that “natural gas should be brought under GST so that the taxes get rationalised and gas becomes cheaper and affordable”, it added.