Formula for jet fuel under GST
The GST Council is likely to discuss ways to bring aviation turbine fuel within the new tax regime.
A meeting of the council is due this month as it meets once every quarter and had last met on December 31.
IndiGo CEO Ronojoy Dutta said the airline was in talks with the government to bring jet fuel under GST as this brings the benefit of input tax credit to carriers.
The Centre had raised ATF prices by 18 per cent on Wednesday.
Sources said the Centre planned to come out with a formula so that the revenue of the states does not get hit by the rationalisation of the tax structure.
The Centre is likely to moot the proposal to allow 18 per cent GST in addition to VAT or excise rate, sources said adding that the formula would be placed before the GST Council for discussion only if it is acceptable to all the states.
The VAT or excise rate, under the formula, could vary from state to state, they added.
Sources said that “the proposed formula will help protect states’ revenues from ATF and also give the window for the aviation companies to claim input tax credit.”
“Rise in jet fuel price adversely impacts us, given that ATF constitutes over 45 per cent of our operational costs. We have been in talks with the government to bring ATF under GST as it brings the benefit of input tax credit,” Dutta said.
He said such measures are needed to make flying viable for airlines and affordable to consumers.
“Rationalisation of taxes will result in high growth for the sector, creating a multiplier effect throughout the economy,” the IndiGo CEO said.