Aviation Top Stories

ATF prices reach record high with latest hike of 16.3%

The price of aviation turbine fuel (ATF) was hiked by 16.3 per cent, to INR 1.41 per kl ( INR 123.03 per litre) in the national capital, according to a price notification of state-owned fuel retailers. Jet fuel, which makes up for almost 40% of the running cost of an airline, has this year surged to new highs. ATF prices have increased every fortnight since the start of 2022.

On 3 June, the price of ATF was reduced by 1.3 percent which was the first reduction after being hiked for 10 rounds of hike in ATF prices.

Meanwhile, in a bid to strengthen air connectivity to the state and boost tourism, the Jharkhand government on Wednesday announced it had slashed VAT (value added tax) on ATF to 4 per cent from 20 per cent.
The decision to reduce tax has been taken to increase air connectivity in the state and bring down airfares to boost tourism, a statement by the state government said.

“The State Government will amend serial number one of Schedule- II Part-E of Jharkhand Value Added Tax Act, 2005 in order to improve the air connectivity in the state. Under this, the tax rate on Aviation Turbine Fuel (ATF) will be reduced from 20 per cent to 4 per cent,” the statement said.

ATF makes up for about 40 per cent of the operating cost of an airline. Jet fuel prices are at a record high in line with the global surge in energy prices. And since India is dependent on imports to meet its oil needs, the only way to cut jet fuel prices is to reduce taxes.

ATF presently is chargeable at an 11 per cent ad valorem rate of excise duty. A concessional rate of 2 per cent is applicable for ATF sold under the Regional Connectivity Scheme.

Ad valorem rate means the incidence of taxation rises whenever there is an increase in the base price. ATF attracts both excise duty of the central government and sales tax or VAT of states. (Source: Mint)


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