Airlines can annually earn combined input tax credits of Rs 5,220 crore – more than five times of what they are getting now – if jet fuel is bought under the ambit of goods and services tax (GST).
Also, contrary to fears that the government will lose out on tax revenue, it will actually earn Rs 10,353 crore, 7% more than what it gets now if the fuel becomes a GST item.
These assessments were given to the ministry of civil aviation last week in a presentation by top executives at Indian carriers. The meeting was chaired by minister of state for civil aviation Jayant Sinha.
An input tax credit is claimed when a company pays a combined tax on output (air tickets in airlines’ case), reducing the tax paid on input (jet fuel). Airlines currently pay value-added tax (VAT) or state sales tax (4%-30%) and excise duty (14%) on ATF, and get credit only on VAT.
The credit amounts to Rs 960 crore. Under GST, there will be a single tax on which airlines can claim credit. The credit would then amount to Rs 5,220 crore. Read More…