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GST on jet fuel: Airlines can earn Rs 5,220 crore input tax credit

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MUMBAI: Airlines can annually earn combined input tax credits of Rs 5,220 crore – more than five times of what they are getting now – if jet fuel is bought under the ambit of goods and services tax (GST).

Also, contrary to fears that the government will lose out on tax revenue, it will actually earn Rs 10,353 crore, 7% more than what it gets now if the fuel becomes a GST item.

These assessments were given to the Ministry of Civil Aviation last week in a presentation by top executives at Indian carriers. The meeting was chaired by Minister of State for Civil Aviation Jayant Sinha.

An input tax credit is claimed when a company pays a combined tax on output (air tickets in airlines’ case), reducing the tax paid on input (jet fuel). Airlines currently pay value-added tax (VAT) or state sales tax (4%-30%) and excise duty (14%) on ATF, and get credit only on VAT. The credit amounts to Rs 960 crore. Under GST, there will be a single tax on which airlines can claim credit. The credit would then amount to Rs 5,220 crore.

All petroleum products are currently outside the ambit of GST. In the wake of rising prices following the increase in global crude oil rates, Petroleum Minister Dharmendra Pradhan recently appealed to the GST council, the nodal body for the tax, to bring petrol and diesel under the GST regime to ensure there is uniform taxation on it.

But there has been no talk of bringing ATF under the tax. The central and state governments currently earn Rs 9,713 crore as tax revenue from ATF.

Under the GST regime that can increase to Rs 10,353 crore, the airlines said.

Airlines also asked for a breather on GST charged on the re-importation of aircraft parts after repair overseas. India doesn’t have adequate facilities for repair of aircraft and aircraft parts and hence they have to be sent abroad.

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