Thursday, July 13, 2017

ATF not under GST: Airlines with small aircraft hit

New Delhi: The Ministry of Civil Aviation is in discussions with states to relax the tax applicable on aviation turbine fuel for smaller aircraft, on which, under the previous system, central sales tax (CST) or value added tax (VAT) was capped at 5 per cent. Under the CST Act, a list of declared goods was mentioned on which taxes were capped at 5 per cent. This list included ATF sold for use on aircraft with a maximum takeoff mass of less than 40,000 kg operated by scheduled airlines.
With the Goods and Services Tax laws replacing the old tax laws, ATF for small aircraft has lost its declared goods status. However, since petroleum products are out of GST ambit, states are free to consider ATF bought for all purposes, as one.
“It is a concern for smaller aircraft, especially since the government is pushing the regional connectivity scheme (RCS), in which a lot many airlines are operating on smaller aircraft. Some states are levying up to 24 per cent VAT on ATF,” a senior aviation ministry official told The Indian Express.
Airlines flying on RCS routes are using smaller aircraft such as 70-seater ATR 72-600 (operated by Air India’s subsidiary Alliance Air), 78-seater Bombardier Q400 (operated by SpiceJet), and ATR 72-500 (operated by TruJet). In May, India’s largest airline, IndiGo, placed an order for 50 ATR 72-600 aircraft. Currently, IndiGo operates only the larger Airbus A320 airliner in its fleet.
13/07/17 Pranav Mukul/Indian Express