Surprise! ATF may come under 18% GST bracket, but Jet Airways, SpiceJet, IndiGo in tailspin

Government is looking at bringing Aviation Turbine Fuel (ATF) under the purview of Goods and Services Tax (GST) even as petrol and diesel prices are still out of the GST. The Finance Ministry is planning to include ATF under 18 per cent tax bracket of GST, a source told Zee Business TV.  However, it is unclear exactly how such a move can impact airfares. Expectations are that the benefits would be passed on to flyers.

However, just yesterday Jayant Sinha, Minister of State for Civil Aviation said in the Rajya Sabha that there is no such proposal to bring ATF under GST. 

"At present, there is no proposal to include ATF under GST," said Sinha in the Rajya Sabha.

Civil Aviation Minister Suresh Prabhu had earlier said that the move will help cut costs as airlines would get input tax credit.

ATF constitutes approximately 35-40 per cent of operational cost of an airline in India.

Sinha's statement come against the backdrop of Civil Aviation Secretary R N Choubey meeting senior officials of the Finance Ministry to impress the need for bringing ATF under GST.

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Airlines, which have been demanding this action for quite some time, maintain that they would get an annual relief of Rs 3,000 to Rs 5,000 crore if ATF is included in GST.

In his written reply, Sinha said no analysis has been made on the impact of higher jet fuel prices on the airlines.

Meanwhile, Jet Airways, SpiceJet and IndiGo share prices slipped up to 2 per cent on the BSE.