Mumbai (Economy India):India’s leading airlines—Air India, IndiGo and SpiceJet—have urged the Central Government to bring Aviation Turbine Fuel (ATF) under the Goods and Services Tax (GST) regime, saying the move would significantly reduce operating costs and improve the competitiveness of the country’s aviation sector.
The demand comes as airlines continue to grapple with high fuel costs, with ATF accounting for one of the largest components of airline
operating expenses.
Airlines Seek Tax Reforms
Currently, Aviation Turbine Fuel is taxed under state-level Value Added Tax (VAT), with rates varying across states. The absence of GST on ATF prevents airlines from claiming input tax credits, increasing their overall cost of operations.
According to industry stakeholders, bringing ATF under GST would simplify the tax structure and enhance operational efficiency.
Expected Benefits
Airlines believe that including ATF under GST would provide several advantages, including:
- Lower operating costs
- Availability of input tax credit
- Uniform taxation across states
- Improved cash flow for airlines
- Greater financial sustainability
- Potential reduction in airfares over the long term
Fuel typically accounts for 35–45% of an airline’s operating expenses, making tax reforms a key priority for the industry.
Industry Push for Long-Pending Reform
The aviation industry has repeatedly requested the inclusion of ATF under GST over the past several years. Industry experts argue that such a move would align India’s taxation framework with global best practices and support the government’s vision of making air travel more affordable.
Any decision to bring ATF under GST would require approval from the GST Council, which includes representatives of both the Central and State Governments.
Outlook
As India’s aviation market continues to expand, stakeholders believe that rationalising fuel taxation could improve airline profitability, encourage investment, strengthen regional connectivity and support the long-term growth of the country’s civil aviation sector.
(Economy India)
