Proposal to bring ATF under GST under consideration, urged states to reduce VAT: Scindia
Amid the ongoing surge in fuel prices, Civil Aviation Minister Jyotiraditya Scindia on April 18 said the proposal to bring aviation turbine fuel (ATF) under the ambit of Goods and Services Tax (GST) is under consideration.
In an exclusive interaction with CNBC TV18, Scindia said he has urged state governments to bring down the value added tax (VAT) levied by them on ATF, which will ease the pressure on airlines.
ATF prices have been on the boil over the past few months, as the decline in COVID-19 cases has led to a consistent recovery in the demand for air travel. With the outbreak of the Russia-Ukraine military conflict and the consequent spurt in global fuel prices, the ATF rate climbed by around 93 percent year-on-year in April.
“The proposal to bring ATF under GST is under consideration and will take time,” Scindia told the news channel, adding that he has, over the past eight months, been “requesting state governments to reduce the VAT”.
“Eight months ago, only 11 states had VAT rate ranging from 1-4 percent and a bulk of the states had rates ranging from 20-30 percent. The ratio has changed as now 24 states levy VAT between 1 and 4 percent only,” the aviation minister said.
Notably, the state-owned fuel retailers had hiked the ATF prices by 18 percent, the steepest ever, on March 16 to bring the prices to Rs 110,666.29 per kl in the national capital.
“There is tenuous relationship between capacity and pricing in the airline sector,” Scindia said, adding that the carriers will have to undertake a “delicate walk” in the days to come.
Despite the global challenges that have led to an increase in fuel rate, Scindia sounded optimistic on the near-term future of the aviation sector.
On April 17, the daily footfall of domestic air travellers jumped to 4.1 lakh, which is the highest in over two years and 95 percent of the pre-COVID-level, he pointed out.
“Reaching almost the pre-COVID-level is an encouraging sign for the industry. This must be maintained,” he added.
Scindia also noted that “for the first time in decades”, the country’s aviation sector will see two major airlines entering the fray. “Akasa and Jet will come with significant fleet sizes which will augment our current strength,” he said.
The aviation sector will not only cross the pre-COVID-level but embark on a growth path “if there is no major COVID wave or any other black swan event,” the minister added.
The flagship Udan scheme of the Centre to boost domestic air travel, which currently includes 417 flights and 67 airports, is being expanded to involve helicopters and small aircraft to improve last mile connectivity, he said.
“We are now in process of working on UDAN 4.2 where we will also bring in the earlier flights. Along with this, we are positioning ourselves for last mile connectivity by bringing in place a scheme for smaller aircraft which include up to 19-20 seaters and helicopters. So there are many initiatives new and innovative initiatives that we are working on within the ministry,” Scindia said.
