In a significant development for the aviation sector, the upcoming 55th GST Council meeting is likely to deliberate on the possibility of bringing aviation turbine fuel (ATF) under the ambit of the Goods and Services Tax (GST) regime, according to sources.
At present, the taxation structure on ATF involves value-added tax (VAT) alongside central excise duty, resulting in a cascading effect on taxes, the sources added. The dual tax regime inflates costs for the aviation industry.
Sources further said that most inputs required for ATF production fall under GST, but ATF itself remains outside its purview. This anomaly prevents manufacturers from availing input tax credit on GST paid on production inputs, thereby escalating operational costs.
Furthermore, the inability to claim input tax credits causes input costs to be embedded into the final cost of ATF. It increases the overall expenditure for refineries and ultimately the aviation industry, further burdening airlines and passengers.
Bringing ATF under the GST regime would address the issue of cascading taxes, offering substantial relief to refineries.
