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Union Budget: Govt must take measures to lower ATF prices to help aviation sector reeling under Covid-19, say experts Air Turbine Fuel | Budget 21-22

Union Budget: Govt must take measures to lower ATF prices to help aviation sector reeling under Covid-19, say experts

India Blooms News Service | @indiablooms | 30 Jan 2021, 03:14 pm

Mumbai/IBNS: The aviation sector has suffered unprecedented losses due to Covid-19 pandemic and still continues to cast its shadow on the sector.

Nearly, a year ago thousands of flights were cancelled as the coronavirus disease began spreading like wildfire and subsequently all flights, except emergency and cargo, were put on halt.

In the midst of this situation, the industry captains have expressed a number of expectations from Union Budget 2021-22 to help the sector reeling in the aftermath of the long suspension of commercial flights. According to Ministry of Civil Aviation's data, the domestic airlines in India carried 55.6 million passengers from January to November 2020, nearly 58 per cent lower from what it carried in the same period last year

The experts have prepared a long list of expectations, including lowering air turbine fuel taxes (ATF) and helping reduce their high cost and debt burden.

Kinjal Shah, vice president, ICRA, has pointed out that the ATF comprises nearly 30-40 per cent of the total cost of an airline, and is sold in India are 45-50% higher, compared to international standard prices, reported Business Insider.

Manish Mishra, Partner, J Sagar Associates said: “With the aviation sector reeling under the impact of COVID-19, the Government may propose inclusion of Aviation Turbine Fuel (ATF) under the ambit of Goods and Services Tax (“GST”). Since GST is a creditable levy which can be offset against the GST liability suffered by the airlines on their revenues, the move would result in lower tax costs for the airlines and would provide the industry a much-needed relief from high operational costs."

While the proposal would require an approval from the GST Council, the budget may put forth a roadmap for this legislative change and initiate the process for building the consensus amongst Centre and the States on this sensitive matter, which has been a bone for contention for quite some time, he noted.

"This may subsequently pave the roadmap for inclusion of other petroleum products into GST over a period of time, starting with Natural Gas and extending to other petroleum products,” he added.