No decision yet on jet fuel tax cut: Govt sources

New Delhi: The Ministry of Finance is yet to take a decision on the civil aviation ministry's plea for tax cuts on jet fuel (ATF) to bring down prices, according to a PTI report.

As per reports, the civil aviation ministry has approached Ministry of Finance with a plea to moderate the prices. However, no decision has been taken yet.

Civil Aviation Minister Jyotiraditya Scindia has been making a case for lowering the high taxes on ATF even as most states have already moved to significantly reduce the value-added tax (VAT).

The Civil Aviation Ministry continues to be in discussion with the finance minister over the issue, the source added.

As many as 23 states have lowered VAT on jet fuel from highs of 20-30 percent. And now it wants the Central Government to cut excise duty.

ATF makes up about 40 percent of the operating cost of an airline. Jet fuel prices are at a record high in line with the global surge in energy prices. And since India is 85 percent dependent on imports to meet its oil needs, the only way to cut jet fuel prices is to reduce taxes.

While BJP-ruled states have reduced VAT, the states housing the country's busiest airports of Delhi, Mumbai, Chennai, and Kolkata have not done so yet.

ATF presently is chargeable at an 11 percent ad valorem rate of excise duty. A concessional rate of 2 percent is applicable for ATF sold under the Regional Connectivity Scheme.

Ad valorem rate means the incidence of taxation rises whenever there is an increase in the base price.

Some in the industry have demanded that the government bring specific excise duty expressed in ₹ per kilolitre to insulate airlines from such volatility.

The aviation ministry has time and again sought the inclusion of ATF under GST. The oil ministry too has favored including ATF along with natural gas under the GST regime to help companies set off taxes that they pay on input.