GST Council may discuss inclusion of ATF to reduce tax cascading, lower aviation costs: Sources  

The GST Council is deliberating the problem of together with Aviation Turbine Gasoline (ATF) beneath the Items and Companies Tax (GST) framework, Enterprise Right now TV has learnt from sources.  

As per the present tax construction, ATF is at the moment topic to an 11 p.c central excise obligation. A diminished fee of two p.c is offered beneath the Regional Connectivity Scheme (RCS).  

Along with excise duties, VAT is levied on ATF at totally different charges relying on the state, including complexity and inconsistency within the taxation.  

ATF is taken into account a variant of kerosene oil.  Whereas nearly all of inputs required for producing ATF are lined beneath the GST regime, ATF itself is excluded, which leads to an inefficiency within the tax construction.  

At present, ATF and pure fuel fall exterior the GST regime and are topic to state-level taxes, together with excise obligation and value-added tax (VAT). These taxes fluctuate throughout states, considerably rising operational prices for industries corresponding to airways, which have lengthy sought uniformity in taxation. As an example, ATF can entice VAT charges as excessive as 30 p.c in some states. 

Impression on aviation trade  

The VAT on ATF is utilized on the complete worth, together with the excise obligation, resulting in cascading of taxes (tax on tax). This will increase the efficient price of ATF.  

Producers of ATF are unable to say enter tax credit score (ITC) on the GST paid on their inputs, which provides to the general price of manufacturing and raises costs for the aviation sector.  

Advantages of inclusion beneath GST  

If ATF is introduced beneath the GST regime, it will assist in eliminating cascading taxes by permitting producers to avail enter tax credit score.  

This might considerably scale back the general price of ATF on the refinery degree, doubtlessly reducing prices for the aviation trade and inspiring higher value predictability and stability.  

Tarun Kapoor, Advisor to the Prime Minister’s Workplace (PMO), has mentioned that the federal government is working to convey aviation turbine gasoline (ATF) and pure fuel beneath the Items and Companies Tax (GST) regime inside this monetary 12 months.   Kapoor confirmed that discussions are underway to implement this shift, which has been a long-standing demand from numerous sectors, particularly aviation and power.

The continued discussions round this matter goal to streamline the tax construction for ATF, making it extra environment friendly and fewer burdensome for the aviation sector, which is already coping with numerous price challenges.