GST Council Turns Down Airlines' Request To Bring Aviation Fuel Under GST Regime.

The Goods and Services Tax (GST) Council has rejected a long-standing proposal from the airline industry to include Aviation Turbine Fuel (ATF) under the GST regime during the 55th Council Meeting on Saturday. This decision maintains the status quo where state governments independently decide the tax rates for ATF.

Airlines have been lobbying for ATF to be taxed under GST to standardise levies across the country, simplifying the taxation process and reducing costs.

However, state governments have opposed the move fearing a major loss of revenue. Finance Minister Nirmala Sitharaman stated that states do not want ATF to be brought under GST, just like petrol and diesel.

The rejection of the aviation fuel proposal points the finger at the ongoing tension between state revenue autonomy and national-level tax reforms.

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For the airline industry, this means continued challenges with varying ATF taxes across states, affecting operational costs.

The decision to exclude ATF from GST is not new. In 2018, the GST Council considered bringing natural gas and ATF under the GST regime, but no decision was made.

The issue has been debated for years with airlines arguing that including ATF in GST would reduce costs and simplify the taxation process.

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Also. the GST Council announced a new taxation rule for the sale of used or old vehicles, including electric vehicles by registered sellers. These sales will now attract an 18 per cent GST. However, transactions between individuals selling vehicles directly will remain exempt from this tax.

The council also deferred a proposal to reduce taxes on life and health insurance premiums. Sitharaman stated that the matter requires further deliberation, delaying a move seen as crucial for increasing insurance penetration in the country.

The 55th meeting of the GST Council held in Jaisalmer, Rajasthan, chaired by Union Minister Nirmala Sitharaman. The meeting was attended by Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers of several states, and other key officials.