GST Council to Discuss on Bringing ATF under GST Regime
ATF currently has an 11% central excise charge, although the Regional Connectivity Scheme (RCS) allows for a 2% concessional rate
GST Council – 55th GST Council Meeting – GST Council Updates – GST Decisions December 2024 – TAXSCAN
GST Council – 55th GST Council Meeting – GST Council Updates – GST Decisions December 2024 – TAXSCAN
As an important development for the aviation sector, the upcoming 55th GST Council meeting is likely to deliberate on bringing aviation turbine fuel ( ATF ) under the Goods and Services Tax ( GST ) regime.
ATF currently has an 11% central excise charge, although the Regional Connectivity Scheme ( RCS ) allows for a 2% concessional rate. Additionally, because each state has a distinct Value Added Tax ( VAT ) rate, ATF is subject to VAT at varied rates.
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The GST Council "shall recommend the date on which the goods and services tax be levied on petroleum crude, high-speed diesel, motor spirit, natural gas, and aviation turbine fuel," as stated in Article 279A of the Constitution, which was enacted with the GST framework.
Additionally, it was stated that these products will be zero-rated if the Council thinks it is appropriate, allowing the Council to set rates going forward. As per the CNBC report, the agenda notes provide thorough justifications for and against the idea of bringing ATF under GST.
"VAT is applicable on the value of ATF, which includes the Central Excise duty paid on it," they continued, adding to the agenda point. This ultimately leads to the tax cascade.
In addition, sources stated, "Industry and manufacturers of ATF currently are not able to avail input tax credit ( ITC ) on the inputs they pay for, which adds to the cost of ATF."
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"Flying is costly due of the high ATF prices. "Bringing ATF under GST would mitigate cascading taxes and potentially lower costs for refineries as well, thereby lowering the cost of flying, the operating costs for the civil aviation industry, and air ticket prices," according to the CNBC news report.
Currently, the most important concern is whether governments will consent to continue discussing this plan. Furthermore, it is unclear if states—many of which are experiencing tax deficits—will be prepared to forfeit their portion of ATF's earnings.
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