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GST: Government slashes excise duty on aviation turbine fuel to 11 per cent - GST Station

GST: Government slashes excise duty on aviation turbine fuel to 11 per cent

GST: Government slashes excise duty on aviation turbine fuel to 11 per cent

    The reduction in excise duty on jet fuel has come less than a week after the government cut excise duty on petrol and diesel by Rs 1.50 per litre and asked state-owned oil firms to subsidise the fuel by another rupee for every litre.

    In a major relief for airlines, which are burdened with soaring fuel costs and depreciating rupee, the government has reduced the excise duty on jet fuel to 11 per cent from 14 per cent with effect from Thursday. Aviation turbine fuel prices hit their highest level since January 2014 due to rising rate of international oil prices and plummeting rupee.

    The reduction in excise duty on jet fuel has come less than a week after the government cut excise duty on petrol and diesel by Rs 1.50 per litre and asked state-owned oil firms to subsidise the fuel by another rupee for every litre.

    The fuel in Delhi currently costs Rs 74,567 per kilolitre and in Mumbai, it is priced at Rs 74,177 per kilolitre. Jet fuel prices, which currently are cheaper than petrol and diesel in Delhi, have since July spiked up by 9.5 per cent. They have been on upswing since July last year, rising every month except in July 2018. Jet fuel was priced at Rs 47,013 per kl in July last year and has risen by 58.6 per cent since then.

    “This excise duty rate cut on ATF (aviation turbine fuel) comes as quite a sigh of relief for the aviation industry, especially in the backdrop of the recent levy of basic customs duty on import of ATF. The increased costs on account of basic customs duty should to an extent be offset by the excise duty rate cut,” said Abhishek Jain, tax partner, EY.

    The government had imposed a basic customs duty of 5 per cent was on jet fuel imports. It previously attracted nil duty. This led to an increase of Rs 2,000 per kilolitre in prices. While the decisions on auto fuels had led to price of petrol drop from a record high of Rs 84 per litre to Rs 81.50 in Delhi and that of diesel to all-time high of Rs 75.45 to Rs 72.95 a litre on October 5, rate hikes on subsequent days has pushed prices upwards. Petrol now costs Rs 82.26 per litre and diesel to Rs 74.35.

    In 2016, the government had increased excise duty on jet fuel to 14 per cent from 8 per cent. ATF, like petrol and diesel, is not covered by the Goods and Services Tax (GST) regime that on July 1 last year amalgamated 17 different central and state taxes.

    Apart from the excise duty charged by the Centre on jet fuel, states levy up to 30 per cent sales tax or VAT — Odisha and Chhattisgarh have 5 per cent VAT while Tamil Nadu taxes ATF at 29 per cent, Maharashtra and Delhi at 25 per cent and Karnataka at 28 per cent. When the GST was introduced on July 1 last year, five commodities — crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF) — were kept out of its purview for the time being. However, the aviation industry, as well as the civil aviation ministry have been for long demanding inclusion of ATF under the ambit of GST.

    Meanwhile, aviation stocks were in high demand Wednesday, surging up to 8 per cent amid reports of the likely cut in excise on aviation turbine fuel (ATF). Shares of Jet Airways soared 7.78 per cent to end at Rs 189.15, while SpiceJet spurted 4.37 per cent to Rs 68.10 on BSE. Shares of InterGlobe Aviation climbed 2.98 per cent to Rs 745.75 . Aviation stocks have taken a hit in the recent past owing to surging crude oil prices.

    Source- Indian Express.

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