Finance Minister Nirmala Sitharaman on Saturday said that states did not agree on bringing aviation turbine fuel under the ambit of Goods and Services Tax.
"States did not feel comfortable. They didn't want the ATF because they saw it as part of the crude petroleum diesel basket, and therefore they said that it alone cannot be taken out, and therefore that continues to remain where it is today," she said while briefing media on the outcome of the 55th GST Council meeting.
Besides, she said, no decision was taken with regard to reduction in GST on insurance premiums as the Group of Ministers (GoM) needed more time to study the issue. Many inputs are awaited, including the one from insurance regulator IRDAI, she said.
She further said that the GST Council has also deferred the decision with regard to rate rationalisation as more time is required by the GoM for a comprehensive study.
However, the Council made suggestions with regard to GST rate revision on various items, including fortified rice kernels and gene therapy.
At present, jet fuels in India attract two tax rates, which are a central excise duty of 11% that is levied by the central government. And the other is Value Added Tax (VAT), whose rates vary from state to state. VAT is imposed by states.
At the start of 2024, states like Goa and Andhra Pradesh raised their value-added tax (VAT) on ATF prices to 15% and 10% per kilolitre from the earlier 8% and 5%. Meanwhile, states like Delhi-NCR, Gurugram, and Haryana charge massive VAT of 25% on ATF on existing airports.
At the start of December, Indian Oil, the largest OMC, increased ATF prices by Rs 1,318.12 per kilolitre, or 1.45%, in Delhi. Other metro cities followed suit. Currently, per kilolitre of jet fuel is priced at Rs 91,856.84 in Delhi, at Rs 94,551.63 in Kolkata, at Rs 85,861.02 in Mumbai, and at Rs 95,231.49 in Chennai.
Airlines 30-40% of expenses are on jet fuel, and hence ATF prices play a key role in their profitability ahead.
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