Proposal to bring jet fuel under GST regime thwarted: Minister

The state government has succeeded in ensuring that the aviation turbine fuel (ATF) is not brought under the ambit of goods and services tax by opposing the agenda brought in the meeting of GST Council at Jaisalmer yesterday.

States opposed proposal

Finance Minister Harpal Cheema said many states were of the view that this would be a first step towards bringing retail fuels under the purview of GST, thus taking away states’ major chunk of own tax revenue.

Fearing that this was the first step towards bringing all retail fuels, including petrol and diesel, under the GST regime, state Finance Minister Harpal Cheema opposed the agenda tooth and nail. At present, Punjab earns Rs 5,000 crore per annum as value added tax on petrol and diesel and Rs 105 crore per annum on ATF.

During the meeting, it was proposed that ATF, a variant of kerosene oil, should be brought under GST. “While most of the inputs for production of ATF are under GST, the fuel is outside its ambit. VAT is applicable on the value of ATF, which includes central excise duty paid, resulting in cascading of taxes. Manufacturers of ATF are unable to avail input tax credit of the GST paid on their inputs, which gets built in the cost of ATF, increasing its cost for civil aviation industry,” said the agenda tabled before the council. Cheema said many states were of the view that this would be a first step towards bringing retail fuels under the purview of GST, thus taking away states’ major chunk of own tax revenue.