In a relief to airlines, the Finance Ministry has said that excise duty on aviation turbine fuel (ATF) or jet fuel, which was introduced last week, will not be applicable on flights going abroad. The move brings domestic carriers on par with foreign airlines for which fuel is exempt from duty.
“The Central Government, being satisfied that it is necessary in the public interest to do so, hereby exempts aviation turbine fuel from the entire special additional excise duty,” the finance ministry said. It also said that the special additional duty would not be applicable when “such goods are cleared for export or supplied as fuel to aircraft going abroad”.
Through a notification, the ministry said that ATF supplied as fuel to domestic carriers on international routes will continue to be exempted from basic excise duty from July 1. July 1 imposed a Special Additional Excise Duty (SAED) or duty of Rs 6 per liter on export of jet fuel.
Oil companies were of the view that levying the export duty would make domestic airlines liable to pay 11 per cent basic excise duty for Aviation Turbine Fuel (ATF) purchased to operate foreign flights.
Abhishek Jain, Tax Partner at KPMG said, “The potential levy of excise duty on supply of ATF to aircraft going abroad has been actively exempted by the government, with no excise duty (basic or special) applicable on such supplies. This alignment to taxability in the form of the current pre-imposition of excise duty on exports is a very welcome move for the airline industry, especially in the backdrop of rising cost of ATF.
The finance ministry’s clarification that domestic carriers will not be subject to excise duty for foreign flights has brought them at par with foreign airlines, for which fuel has been exempted from duty. Chicago conference.
Jet fuel prices were also cut by 1.3 per cent on June 1 – the first reduction since 10 rounds of price hikes – on softening international crude rates.
The price of Aviation Turbine Fuel (ATF) – the fuel that helps airplanes fly – has come down by Rs 1,563.97 per kiloliter or 1.27 per cent to Rs 1,21,475.74 per kiloliter (Rs 121 per liter) in the national capital. For price notification of state owned fuel retailers. This was the first reduction after 10 rounds of hike in prices this year. Prices rose by Rs 6,188.25 per kl or 5.29 per cent to a record high of Rs 1,23,039.71 per kl on May 16.
Jet fuel prices are revised on 1st and 16th of every month, while petrol and diesel rates are revised daily based on similar rates in the international market. ATF now costs Rs 120,306.99 per kiloliter in Mumbai, while it costs Rs 126,369.98 in Kolkata and Rs 125,725.36 in Chennai.
Rates vary from state to state depending on local taxation events.
(with inputs from PTI)
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