Civil aviation ministry has written to the finance ministry suggesting ways to compensate airlines that will not be able to take input tax credit on aviation turbine fuel (ATF) under the Goods and Services Tax (GST). Since petroleum products including ATF are outside the GST regime for the time being, airlines will not be able utilise credit on taxes paid on ATF – a key input which comprises over 40 per cent Union civil aviation minister Ashok Gajapathi Raju said his ministry has suggested various alternatives to the finance ministry to help compensate airlines that cannot take tax consultancy firms in delhi ncr credit on ATF under the GST regime.
“GST is becoming a reality but India is a federal structure. So generally, GST means, they (corporates) would get set-offs for their inputs.Now here in this federal structure, state governments wants petroleum products to be kept out of it. That generates one type of problem because petroleum and intoxicants, state governments want that out (of GST). Ok, keep that out but then how do they get the set-off, that becomes a double whammy,” Raju said.
“The issue has to be identified, flagged and the ministry has flagged it with the finance ministry in indirect taxation in India. They have to take a call on it, what to do, how to go about it. Anywhere between 40-45per cent of the operating costs are fuel. If fuel is high taxed and that too with no set offs, they will be in trouble,” the minister said.
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