New Delhi: Country’s top airlines have written to the Ministry of Civil Aviation urging it to bring Air Turbine Fuel (ATF) under the Goods and Services Tax (GST) regime under the 5% tax slab with full Input Tax Credit.
Federation of Indian Airlines (FIA), which represents major air carriers including IndiGo, Air India and Spicejet, has argued that implementing suggested changes could help improve operating cost and liquidity of airlines, also thereby, bringing down air fares.
The airlines grouping has sought removal of Central Excise Duty and Value Added Taxes (VAT)s imposed by various states on aviation fuel, and instead impose a uniform 5% GST alongwith full Input Tax Credit.
Currently, ATF attracts 11% Central Excise Duty and State VATs in the range of 1 to 29%.
In their submission, the Federation said ATF accounts for about 40% of airlines expenses, which is the largest component of their operations. It also said that rupee depreciation, air space curbs and high ATF prices due to the West Asia crisis has negatively impacted the finances of airlines.
The group said abolishing irrecoverable taxes could help airlines save 9% of their operational costs.
Submission by the airlines grouping comes at a time when the next GST council meeting is scheduled to be held later this month.