Airlines could earn five times more of the input tax credit that they get currently if jet fuel is brought under the ambit of GST (goods and services tax). Moreover, contrary to concerns that the government will lose out on tax revenue if this is levied, the government is likely to earn 7% more than what they are getting if jet fuel come under GST.
According to a report in The Economic Times, the government could earn Rs 10,353 crore - 7% more than what it earns now - and airlines could earn a combined annual input tax credit of Rs 5,220 crore. These findings were revealed by top executives of Indian airlines in a presentation to Ministry of Civil Aviation. Aviation minister Jayant Sinha presided over the meeting.
For the uninitiated, an input tax credit is claimed when a company pays tax on output after reducing the tax already paid on inputs. In case of airlines, output would be tickets and input would be items like jet fuel. Airlines currently pay VAT or state sales tax that amount to anything from 4% - 30% and excise duty on ATF (Aviation Turbine Fuel) that amount to 14%. But they get a credit on VAT only which currently amounts to Rs 960 crore. Under GST, there would be only one tax that would amount the credit to Rs 5,220 crore.
Rising fuel prices are increasingly becoming a cause for concern for the common man. Petroleum minister Dharmendra Pradhan had also recently appealed to the GST Council to include fuel prices under GST. Even so, there has been no discussion of bringing ATF under GST.
The airlines executives said that if ATF is brought under GST, tax revenue could amount to Rs 10,353 crore from the current Rs 9,713 crore.